The euro extended its recent gains after leaders paved the way for Athens to receive another slice of its bailout money; however, the single currency failed to break past stiff resistance near one-month highs against the US dollar, suggesting some selling pressure on the belief that Greece’s fiscal outlook will continue to unsettle the euro in the months ahead. Sterling followed the euro higher against the US dollar prior to the announcement, hitting a three-week high, with part of the move perhaps motivated after the UK Chancellor announced Canada’s Mark Carney as the man to take charge of the Bank of England next year. Investors should continue to assess debt arrangement for Greece. If analysts ultimately conclude that Europe has simply uncovered another short-term fix for Athens, the euro and other high-interest currencies that have rallied in recent weeks could come under pressure.

Sterling

Sterling rose briefly, reaching three-week highs against the US dollar after UK Chancellor George Osborne named the Bank of Canada chief, Mark Carney, as the man to take charge of the Bank of England once Governor Mervyn King’s term expires next year. Investors may have little chance to digest what that will do for monetary policy in 2013 ahead of revised third quarter GDP figures.

US dollar

The US dollar slipped after officials from Europe and the International Monetary Fund, meeting for the third time this month, finally settled on how to restructure Greece’s long-term fiscal programme. The deal will allow the debt-loaded country to tap into its bailout fund again, which has been suspended while Athens implemented tougher austerity measures to meet conditions set out by its international lenders.

Euro

The euro jumped to its highest in nearly a month against the US dollar after eurozone leaders finally agreed to restart Greece’s stuttering bailout programme. However, the single currenc has already pared some of those gains, suggesting that markets still remain insecure about the country’s ability to keep up its end of yet another shake-up of its second rescue package in three years. Crucially, officials agreed to dispense around €35 billion of new loans to Athens as soon as national governments give the latest fix a green light; althoughthe International Monetary Fund will review its continued participation having agreed to loosen targets on lowering Greece’s national debt.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.