Sterling had a subdued end to the week following weaker than expected retail sales figures and the “dovish” (i.e. not keen to tighten monetary policy) stance of Bank of England governor Mervyn King at a key speech last week. With no key data released today, markets are likely to focus on the ongoing Greek debt crisis which has taken further turns over the weekend – most notably the deferral of payment of €12bn in emergency loans and still no decision regarding a new bail out. In terms of data in the UK this week, we have the MPC minutes on Wednesday and public finance figures tomorrow. Whilst the Bank minutes have the potential to cause volatility, they are likely to show that the bank has no desire to change monetary policy currently.

In the euro zone, Greece is most definitely the word on everyone’s lips this morning. Finance ministers yet again failed to reach agreement on a new package for Greece and withheld the next tranche of loan payments until Athens follows through with tough austerity measures. The problem is that the Greek public doesn’t want to change – several days of riots in Athens are testament to that. PM George Papandreou effectively pleaded to Parliament to support the austerity measures or face certain bankruptcy as Greece defaults on loan repayments in July, but various populist and socialist factions seem unwilling to support him. Meanwhile, analysis from the CEBR will today show that the euro is likely to break up within 5 years… Call in now for a live exchange rate.

In the USA, it is an important week for USA with the next Federal Reserve meeting on Wednesday. The Fed’s second round of Quantitative Easing comes to an end soon, and markets are expecting the Fed to maintain interest rates near zero for an extended period, but if the central bank embarks on another round of QE, this will trigger US dollar selling and actually help support the euro. Get in touch to avoid losing out.

Elsewhere, Russian President Dimitry Medvedev stated that Russia’s economic growth could be comparable to that of China and Brazil if it sorts out its problems. He forecast 4.5% growth for the economy this year.

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