Greece’s pro-bailout party, New Democracy, came out on top following elections, thus eliminating the risk of its opposition party, Syriza, potentially forcing a break-up of the eurozone. In the UK, the pound’s late surge is in danger of collapse should inflation data, Bank of England minutes and unemployment figures point towards more monetary easing. A marked slowdown in the world’s biggest economy has led to speculation the Federal reserve will soon respond with more stimulus that would weaken the dollar, fragment the markets eurozone focus perhaps and give risk-taking a boost. Traders are also gearing up for a G20 gathering for any announcements in regards to a new coordinated liquidity programme that would help shore up still-jittery financial markets.

Sterling

The pound finished with a flurry with investors feeling assured by the government’s early announcement that it will inject £100 billion into the British economy through a new lending programme and by opening up the Bank of England’s emergency short-term liquidity scheme for banks. Cable surged to near one-month highs but has since retreated with investors still nervous about UK monetary policy.

US dollar

Recent US economic data releases have shown a marked slowdown in the economy while rhetoric from Federal reserve officials has been consistently clear that should the country’s recovery falter, policymakers will respond with more asset purchases if necessary. Until the announcement the US currency looks vulnerable to more losses but should policymakers decide to hold fire, investors may back peddle on bearish dollar bets quickly.

Euro

The euro climbed sharply to one-month highs against the US dollar following news that Greece’s New Democracy party, who are in favour of sticking to the terms of the country’s bailouts, finished ahead of anti-austerity group Syriza. The single currency has been under enormous strain since the previous elections in May proved inconclusive, forcing the Greeks to take to the polls again.

Japanese yen

The yen is currently hovering near one-month lows against both the euro and British pound after Greek election results has put the country’s pro-bailout parties in charge of leading a new government. With the risk of Greece exiting the euro seemingly removed, for now, investors have responded by dismantling safe haven positions.