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Posted March 25th, 2013 by Charles Purdy

Cyprus back from the brink | Smart Daily Currency Note

GBP/EUR – 1.1714

Sterling had a mixed day on Friday, falling from its five week high against the euro, as an injection of confidence into the 17 nation currency came as a result of Cyprus moving closer to reaching a bailout agreement. It is a fairly quiet week on the data front in the UK with the main release being the quarterly release of current account statistics, showing the difference in value between imported and exported goods, which will undoubtedly have an impact on the markets. Other data released this week includes a raft of housing related data including the monthly change in the number of new mortgages approved for home purchase and the change in the selling price of homes with mortgages. We also have the Chancellor speaking, the Bank of England’s quarterly report on the current level of credit in the UK and the final GDP reading for the fourth quarter of 2012 which is expected to show a contraction of 0.3%.  This, combined with the developments in Cyprus, is likely to make it an interesting week for sterling. Get in touch for the latest rates.
Friday saw some mild improvements for the euro, ending an extremely bad week for the 17 nation currency. Although German data on the Business Climate in the country came out with a disappointing set of figures, we saw the euro rise against all of its major peers for the first time in a week based on optimism of resolving the situation in Cyprus. Over the weekend, a deal principal appears to have been struck between Cyprus and the Troika helping the euro back over the 1.30 level against the US dollar. This deal will now go to Brussels, as it needs to be signed off by the Eurogroup finance ministers. This week see’s a lot of data released including consumer climate figures, the monthly retail sales data and the change in unemployment in Germany. There has been a raft of poor data out of Europe recently so analysts will pay close attention to see if this weeks figures follow suit. We also have an Italian 10-year bond auction which will be closely scrutinised as Italy has still not formed a Government following the recent elections. The outrage in Cyprus and speculations on contagion effects and a potential bank run continue to be a threat for the Euro Area as a whole, so call in today for the latest update from your trader.

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