EUR/GBP is getting crunched after working through bids in the 0.8800/10 area late in the UK session. The move comes despite the slight easing in Greek interest rate differentials and some stabilization in Greek bank shares.
There has been lots of talk in the market today of wealthy Greeks moving money offshore (something associated with emerging markets, not hard currencies), and perhaps some of those funds are flowing into swinging ol’ London Town.
Beyond that, you’ve got electoral cross-currents hitting the market. Yesterday, Lilac and I concluded that a UK election call today would be an admission of defeat by Labour after the weekend polls put the Conservatives up 10%.
Tighter polls today (Tories by 4%) had the market concerned by hung-parliament fears once again. Intrade has the Conservatives at an 85% chance of winning the election, so the polls are fun for journalists, but the markets seem to be reverting to the view that a new government is on its way and fiscal tightening is ahead.
EUR/GBP resistance is now at 0.8810 on rebounds 0.8750/70 is the next support zone of note on weakness.
Stops in cable are seen in the 1.5250/55 area and look like they are susceptible to a run before London heads home.
