Currency - GBP / Euro

The Greece story remains in the background even as German and French data shows twitches of improvement. Traders and investors are still very nervous about getting too heavily involved in the euro until they are much more confident that the worst is behind us. Traders took heart from the fact recent European government bond auctions have been well received by the markets and the interest rates demanded by those bidding for the bonds have been lower than most had feared but that hasn’t been enough to boost the Euro. Events elsewhere have made investors slip away from the Euro and into lower yielding but intrinsically safer assets including US treasury certificates, Japanese Yen and Swiss Francs. The Japanese and Swiss central banks are very concerned about this move but will find it hard to weaken their respective currencies in the current environment. So the gently improving Pound has managed to push the euro up above €1.20 where it has languished for the last few days. It may not be a very technical term but the Pound does look tired at these levels and certainly appears to lack the gumption to shove the Euro to higher levels.