Market Watch

The euro is looking a little healthier after the deal with Greece is sealed, but there is a long way to go before the single currency is out of the woods...

Following the agreement of the second Greek bailout deal on Monday, the euro continued to   post gains against the dollar and sterling. Over the course of the last week   the euro has moved higher by almost three cents versus the dollar and by a   cent and a half against the pound. However, this rise in value has been   limited due to the fact that most of the strength had already been discounted   in the run up to the announcement. The opinion in the market appears to be   that the euro will struggle to make much further ground from here there are   still plenty of dealers who think this change of sentiment may be   short-lived, unless there are any (positive) surprises to come out of the   Europe.

The pound has moved   higher on the coattails of the euro recently but has struggled to get above $1.5850   where the sellers appear to be waiting. In spite of the strong retail sales   figures on Friday there are still concerns about the health of the UK   economy, which should prevent he pair from breaking through the $1.60   any time soon, with the downside probably limited to $1.5650. The   minutes form the last Bank of England meeting are released today which will give an insight into the latest round of QE which was approved at the start   of this month.   

The euro is   outperforming Sterling this week, taking the pair down to the bottom end of   the recent range this morning around €1.19. As we have published for   some while now, whenever the rate starts to trade above €1.2050 the   sellers come in to the fray, so it is certainly prudent to consider buying   euros if we see such a rally again in the near future. Most experts that we   talk to are consistent in their view that there is no reason to suggest that   the we will break of the current €1.19-€1.21 range in the near future   with the low of €1.1880 that we hit at the end of January providing   solid support for now. 

Sterling has managed   to hang onto recent gains against the commodity currencies, without looking   likely to head much higher from here. The market view remains that this move   could be very short lived, due to the continuing strength of these economies,   meaning that any further improvements for the pound in this area should be   very limited.

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