Sterling bounces back after Greek austerity measures approved

Published: 30 June, 2011

Sterling recovered against the euro yesterday after the Greek parliament approved a vital set of austerity measures that pave the way for a second bailout.

Currency rates - June 30

EURO/GBP - 1.1060
US$/GBP - 1.6026
CHF/GBP - 1.3361
CAN$/GBP - 1.5475
AUS$/GBP - 1.4938
ZAR/GBP - 10.845
JPY/GBP - 128.82
HKD/GBP - 12.471
NZD/GBP - 1.9326
SEK/GBP - 10.124
US$/EURO - 1.4486

Sterling also made gains against the US dollar after a poll showed a jump in inflation expectations that boosted hopes of an earlier than anticipated interest rate hike in the UK. Currently markets expect that the Bank of England will wait until at least 2012, before touching rates.

In the euro zone, the big market moving news of the day was that Greece's parliament approved austerity measures, despite violent protests in Athens' Syntagma Square. Parliament approved a five year package of cuts, tax increases and the sale of state assets. Whilst this is a step in the right direction, many expect that Greece will still default at some point and that debt restructuring is inevitable.

In the USA, the euro strengthened against the US dollar as risk appetite saw investors reversing safe haven trades into US government bonds. As a result, the euro traded up 0.5%, hitting a high of $1.4447/ €1. In terms of data, yesterday saw a surprising boost from housing data with pending home sales rebounding from -11.3% to hit 8.3%.

Elsewhere, the Australian and New Zealand dollars gained against the majority of their counterparts as Greece approved its austerity plan. This saw a boost to risk appetite and a increase in demand for higher yielding assets. Both climbed by more than 1% against the US dollar.

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