A shock rise in the cost of living is potentially a cause for concern as it likely interest rate rises may take place sooner rather than later. High petrol prices pushed UK inflation from the key 3% percent mark to 3.4%. Sterling saw a small spike against the US dollar and retracing back to lower levels.

Against the Euro, Sterling continued its recent rally. The pound is currently trading at levels seen back in February after breaking above the high of 1.1484 this morning. The next significant target on the upside is the late January high of 1.1621.

A 20 member team from the EU and IMF is due to start their delayed negotiations today on activating the 45 billion Euro emergency package for Greece. Greek bonds are now trading over a 450 basis point spread to the German bunds. The Greek government needs to raise 10 billion in May to meet its commitments.

The Euro continues to carry a heavy weight, traders are trying to filter between the positive economic fundamental data and the concerns over macro fiscal debt issues. If the Euro is sold back above the 1.16 level against the pound, technically this will be a good indication of higher prices to come in the second half of the year.

Wednesday 21 April 2010, 12:03pm

Once the markets received confirmation the EU will support Greece, the Euro staged a 2% rally. However the FX markets are still concerned about the debt package, it is possible that Greece may not accept the package and therefore questions will still remain.

From a macro perspective, the financial package agreed by the EU does little to change the fact that the Euro Zone is likely to underperform other economies. Spain, Portugal and Italy are sinking toward the same crisis and this will weigh on the single currency.

Against the US dollar, Sterling is not comfortable below the 1.50 level. In the recent weeks Sterling buyers have been entering the market, but clearly the recent rally has not been a smooth one. Many traders will be keen to keep the pressure on sterling until they can see some clear economic shift in data. The coming elections will also be a key factor.

Wednesday 14 April 2010, 12:00pm

Sterling has continued to surge against the single currency as Greece struggles to finalise the bailout agreement with the EU. Greece has been forced to deny allegations that it was seeking to restructure the rescue package constructed by the EU last month. Borrowing costs have again soared and investors are again questioning the ability of the country to refinance its debt.

The UK election is underway and the next month is expected to be volatile for sterling. Travellers planning a holiday abroad to the Euro-zone in the coming months are advised to consider taking advantage of the recent rally in the sterling by loading their FairFX Euro Cards at the preferential rates.

The 1.48 level is significant for cable as this is a key longer term support level; the pound seems fairly content trading between the 1.48-1.54 region. A clean break of 1.48 would be concerning for sterling.

Wednesday 07 April 2010, 11:35am