Economic Events: (GMT)
07:00 EUR GfK German Consumer Climate 5.6 5.6
The Gfk German Consumer Climate Index measures the level of consumer confidence in economic activity. The data is compiled from a survey of about 2,000 consumers which asks respondents to rate the relative level of past and future economic conditions.
A higher than expected reading should be taken as positive/bullish for the EUR,while a lower than expected reading should be taken as negative/bearish for the EUR.
11:00 GBP CBI Distributive Trades Survey 1 9
The Confederation of British Industry (CBI) Distributive Trades Survey (DTS) measures the health of the retail sector. The reading is compiled from a survey covering 20,000 firms responsible for 40% of employment in retailing. It includes measures of sales activity across the distributive trades. It is a leading indicator of consumer spending. The figure is the difference between the percentage of retailers reporting an increase in sales and those reporting a decrease.
A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.
EUR/GBP Fundamental Analysis Jan. 26, 2012, Forecast
Analysis and Recommendations:
The pair EUR/GBP is currently 0.8332 the euro was dropping agaist the pound.
German Chancellor Merkel surprised the markets today when she said that there is the possibility of a Greek default. Merkel conceded that Europe’s first ever multibillion bailout coupled with savage austerity was not working after two years of crisis that has brought the single currency to the brink of unraveling. Merkel also noted that she would like the European court of justice (ECJ) be empowered to police the public spending and budget policies of the 17 countries in the euro.
Merkel called for the eventual creation of a European political union, with many more national powers ceded to a central government, a strengthened bicameral European parliament, and the ECJ assuming the role of Europe’s supreme court.
In light of these statements and demands, it is surprising that the euro has not dropped like a hot potato. These feeling are not mutually shared among the nations of the EU.
Greek creditors today insisted that as part of a negotiated default that the ECB also take a significant write down of the Greek holding, which the ECB has flatly refused. Christine Lagarde of the IMF today said it maybe necessary for the ECB to give in.
In Switzerland the World Economic Summit is opening this evening with Chancellor Merkel as the keynote speaker.
Today the markets began to focus on Portugal, who will likely need additional bailout money shortly. Credit Default Swap insurance surged today on Portugese debt, a sign that problems are in the works.
In London early reports stated that gross domestic product contracted more-than-expected in the fourth quarter, down 0.2% after a 0.6% rise the previous quarter. Analysts had expected GDP to decline 0.1% in the fourth quarter.Also the minutes of the Bank of England’s latest policy meeting revealed that policymakers believe that the U.K. is still facing considerable risks from the global economy.
Though the sterling is exposed to weakness, the euro should be the weaker of the two in the coming days.
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Originally posted here
