Pound loses more ground
The 200-day moving average in EURGBP gave way yesterday and it was like the dike breaking as the pound was knocked for further heavy losses overnight and in today's European session. The negative adjustment to the year -on-year GDP level and especially perhaps the adjustment to Gross Fixed Capital formation to the lowest level in a generation save for one ugly reading back in the mid-80's. It is a critical blow for the pound to have lost so much ground against the lowly Euro, for which sentiment could hardly be lower.
Euro
A modest (in volatility terms) bullish pattern reversal yesterday in EURUSD saw a small further rise to local resistance just above 1.3600, but much of that rally was already unwound ahead of the US data this morning. The Independent cited Greek sources as saying that the EU mission sent to inspect the fiscal situation will say that Greece will miss its targets for deficit reduction. The EU Commissioner Rehn will be traveling to Athens next week. Spreads on Greek debt were actually slightly improved today, as were CDS prices that bet on the odds of a Greek default.