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Daily currency report

Overview

The euro surged to one-month highs against the British pound on growing optimism Greece is about to secure a fresh injection of capital from its bailout fund which could be unlocked at a meeting between officials. Should Athens pass its latest fiscal-fitness-test, the single currency could continue to march higher and, expectations that they will, are already pushing the euro towards three-week highs against the US dollar.

Thanksgiving holiday in the US may have amplified the moves although UK fundamentals certainly supported a weaker pound after CBI’s industrial trends survey missed forecasts. The eurozone published dire PMI surveys covering the regions manufacturing and services industries but hopeful comments from Germany kept investors pinned to the Greek-debt story. Europe’s strongest economy is being dragged further into the debt crisis which could interrupt euro gains. However, investors may continue to make preparations for euro zone meeting and this could keep risk-taking elevated, and weaken the US dollar.

Sterling

Below-par UK industrial data overlapped confidence Greece will shortly be given access to its bailout fund, sending the pound crashing to one-month lows against the euro with analysts eyeing further losses. CBI’s industrial trends survey for November missed forecasts, while the reports forward-looking component supported Bank of England fears that the British economy could shrink again in the fourth quarter.

US dollar

Thanksgiving closed US markets, allowing investors to focus their attention on European developments where hopes Greece were edging towards a fresh loan deal sent demand for the safe haven US dollar sharply lower. Subsequently, Cable opens near two-week highs and may continue to climb with most traders in the US probably out enjoying Black Friday shopping.

Euro

Optimism Greece will gain access to its bailout fund sent the euro higher across the board, allowing the common currency to shrug off more disappointing data and close Thursday’s session near three-week highs against the US dollar. Merkel said that she was hopeful a deal for Greece could be signed off, while the European Commission, one arm of Greece’s lenders, suggested that Athens has done enough to secure additional funding. The issue of Greece has been a damaging topic for the single currency in the past, but if the country successfully passes its latest fiscal-fitness-test, the euro could soar.

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