Sterling had a relatively strong week against the euro last week, but failed to push higher on Friday as analysts were left to digest the outcome of the EU summit. David Cameron’s veto of the treaty changes was referred to as “bad for Britain” by Deputy PM Nick Clegg yesterday and there could be signs of cracks beginning to form in the coalition, which could be negative for sterling. However, polls by major newspapers seem to show that the majority of the public are in favour of the veto. The PM speaks to the Commons later today on the veto and reasons behind it. Later this week we have inflation, unemployment and retail sales figures so call in now for a live exchange rate.

In the euro zone, leaders made decent progress towards a solution to the debt crisis at last week’s summit. The measures include a new treaty aimed at a ‘genuine fiscal stability union’ and the adoption of a new rule that the annual structural deficit may not exceed 0.5% of GDP. In addition, punitive measures kick in if this is deviated from. It is already widely known that the UK was the only member of the EU not to sign up to the new measures and it remains to be seen what the impact of this is likely to be. Later this week there is further discussion over amendments to the EFSF so call in now for a live exchange rate.

In the USA, the US dollar was very volatile last week with the market trading back and forth ahead of the EU summit. In the end, investors were somewhat disappointed at the lack of a comprehensive solution to the crisis and the US dollar ended the week marginally down. Market sentiment is set to remain subdued in the coming days as investors and analysts digest the details of the summit. Released this week we have retail sales and inflation figures so call in now to avoid losing out.

Elsewhere, with market movements and concerns over the EU summit, sterling has performed well against the commodity currencies including the New Zealand dollar. Sterling has held above $2.00/£1 for the past few days, but sentiment is fragile and it could easily drop back below 2. Call in now for a live exchange rate.



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