Euro drops to an eleven year low as Syriza win Greek elections

United States Dollar:

The pound actually held up pretty well on Friday as the sell-off in EUR/USD weighed on dollar cross rates. The fall-out from the ECB’s QE announcement, and the threat of a Greek exit from the eurozone in the lead up to the weekend’s national elections, saw EUR/USD sold off, putting pressure on GBP/USD. Better than expected UK retail sales data released on Friday morning helped the pound’s cause, unexpectedly rising in December by 0.4% - helped in part by better demand for cheaper petrol. Selling in EUR/GBP then intensified as the afternoon session approached, which in turn supported cable. It pushed back above 1.5000, eventually trading to a high of 1.5031 – it opens this morning at 1.5015. The focus early on this week will likely remain on the ECB’s previous announcement and the Greek election result – there’ll no doubt be plenty of rhetoric and analysis around both, which will keep traders and investors on their toes. Data wise, key events this week include UK prelim GDP on Tuesday and the US FOMC statement on Wednesday evening.

We expect a range today in the GBP/USD rate of 1.4960 to 1.5050.

Euro:

EUR/USD fell to an eleven year low overnight as the affects from the QE announcement on Thursday continued to ripple through markets. ECB board member Benoit Coeure said on Friday that this programme could be expanded or extended if the impact on inflation isn’t deemed enough. He’s been reported this morning as saying “it’s absolutely clear that we cannot agree to a debt relief that includes Greek bonds that are located at the ECB”. News over the weekend that anti-austerity party Syriza had won the Greek national elections also put further downward pressure on the single currency. With this victory there are growing fears that the Greek bail-out programme will fall away in the near future, but not before showdown talks between the new governing party and its lenders. After falling to a low of 1.1097 overnight, EUR/USD has recovered to open this morning at 1.1230, suggesting that the move ahead of the weekend’s elections was overdone. It has recovered a little from its overnight lows against the pound, to open in London at 1.3365.

We expect a range today in the GBP/EUR rate of 1.3290 to 1.3360.

Aussie and Kiwi Dollars:

It is a public holiday in Australia today, so AUD/USD has failed to make any kind of worthy recovery post ECB/Greek election sell-off. It opens this morning at .7890. NZD/USD has been similarly quiet overnight and also opens in London on the back foot at .7435. Local traders in Australia return to their desks on Tuesday at which point NAB business confidence is due.

We expect a range today in the GBP/AUD rate of 1.8900 to 1.9180.

We expect a range today in the GBP/NZD rate of 2.0090 to 2.0280.

Data releases for the next 24 hours:

AUD: NAB Business Confidence

EUR: No data

GBP: BBA Mortgage Approvals

NZD: No data

USD: No data