The euro is under pressure again against the dollar, sterling and yen.
The news that the Spanish central bank was taking over one of the country’s savings banks is weighing heavily on sentiment as is the general concern about contagion from the euro-zone sovereign debt issue.
Sterling is trading higher versus the euro this morning, but is under pressure versus the dollar following a broad based sell off of what are perceived to be riskier currencies and assets overnight. Concerns over North Korea have also affected market confidence.
Interestingly the announcement by George Osborne of £6bn of government cuts in the UK had little impact on the markets.
This cut comes ahead of the government’s emergency Budget, due on 22nd June. More severe action is expected to be taken as part of this, potentially including tax increases. With the full scale of future measures expected to become clearer, it’s likely to help decrease the level of market concern with regard to the U.K. budget deficit – one of the highest in the European Union.
This morning’s release of revised Q1 GDP data for the U.K. confirmed that GDP increased by 0.3% during the first quarter. This figure has been revised from a rise of 0.2% in the preliminary estimate of GDP. The Treasury said that the GDP revision is welcome, but confirmed that output is still 5.5% below peak.
Falling as low as $1.2219 in early morning trade versus the dollar. If it falls below last week’s four year low of $1.2146, the next support area is $1.2000, which is more of a psychological support than a technical support in terms of its importance.
Drawn from Market Analysis by Hannah Wilson, TorFX
Any opinions expressed in this document are aimed at helping readers understand market conditions and developing trends. Readers are wholly responsible for their own trading decisions.