Raphael Sonabend, FX Analyst
In an unsurprising result, the left-wing Syriza party won the Greek elections. The leader, Alexis Tsipras, has vowed to end Greece’s “five years of humiliation and pain” whilst leaders worldwide have expressed apprehension about what this means for the Eurozone. Since joining the Eurozone in 2001, Greece has seen crises after crises, which have radiated throughout Euro-area countries. With Syriza now in power, economists and politicians have raised concerns about the fresh crisis this could bring. As Syriza previously stated that they want to take Greece out of the Eurozone, worries of a “Grexit” will be reignited. Whilst the euro fell after this result, it has since recovered in this morning’s session. As this widely expected result was largely priced into the markets, a quiet day today may allow for some euro gains.
GBP/EUR: Currently trading at 1.3357
- Last Friday saw an unexpected result from UK retail sales as a surprising surge in food sales brought a positive result. Forecast to fall by -0.6%, the result was in fact an increase of 0.4%. Sterling’s strength continued as traders’ focus turned to the Greek elections. As predicted, Syriza won the Greek elections and as a result the euro dropped once again. This pair briefly traded above 1.35 before the euro resisted further gains. As articles worldwide have described this win as placing Greece on a collision course with the Eurozone, the immediate reaction was one of worry. However we have seen euro make solid gains in this morning’s session.
- After the German Ifo Business Climate survey this morning, which came in line with predictions and saw continued euro strength, our focus for the day will be on the UK BBA mortgage approvals this morning. Forecast to drop slightly from 36.7K to 36.6K, euro strength could continue throughout the day.
GBP/USD: Currently trading at 1.5015
- After a week of volatility, Friday finally saw some respite for this pairing. Trading on Friday between 1.504 and 1.495, this pair was unaffected by the Greek elections.
- With no US data out today, our focus will be on UK mortgage approvals this morning. Despite forecasts predicting a slight drop, we anticipate the pound will attempt to recover some of the losses made last week.
EUR/USD: Currently trading at 1.1238
- With Draghi not disappointing on his big QE announcement on Thursday, the pairing managed a weekly close of 1.12, the lowest it has been in over 11 years. It will be interesting to watch how the markets digest yesterday’s news out of Greece, where the anti-austerity party Syriza won the general election, raising concerns of Greece’s position in the Eurozone. Some traders will now be questioning whether this pairing could soon be at parity.
- As a quiet day is due in the forex calendar today, the day’s activity is set to be influenced by yesterday’s events in Greece.
GBP/AUD: Currently trading at 1.9011
- Following an extremely volatile week, which saw the rate climb almost 5 cent to peak around the 1.90 mark, the pound found further strength after the Greek elections yesterday and this pair jumped another cent.
- This week also presents us with another busy economic schedule, kicking off with the UK BBA mortgage approvals this morning, which are forecast to cool off slightly. Traders will then be looking towards the Aussie business confidence survey results in the early hours of tomorrow morning.
GBP/NZD: Currently trading at 2.0182
- In the first week of 2015, the pound lost eight cent on the Kiwi however last week saw all these losses being reversed and Sterling begun to post gains of its own. Now trading above 2.015, the pound looks set to continue on its advances, at least until the RBNZ rate statement on Wednesday.
- Poor NZ credit card spending this morning helped the pound gain further on the Kiwi and our focus for the rest of the day will be on UK mortgage approvals this morning. The slight drop predicted is unlikely to affect this pairing too much and the pound’s gains could continue for the rest of the day.
GBP/CAD: Currently trading at 1.8719
- UK retail sales surprisingly rose in December, with consumers buying more food and fuel on the back of falling oil prices. Economists were predicting a drop after shoppers took advantage of November’s Black Friday sales. A slight rise in oil prices last week saw the Loonie posting gains against the pound however these were quickly reversed as Canadian CPI registered a larger fall than forecast.
- With a quiet day due in the FX calendar, the pound could continue to advance in today’s session.
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