British Pound Sterling

The pound sterling (Currency:GBP) is not having a good start to the week as risk-on currencies benefit from the market friendly outcome to the Greek elections.

The pound euro exchange rate is 0.25 pct lower on a day-to-day basis at 1.2404. (Please see the latest pound sterling forecasts on our IMT site, access is Free via this Facebook entry path).

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The pound dollar exchange rate is 0.25 pct down at 1.5672.

The pound Australian dollar exchange rate is 0.24 pct down on Friday's close at 1.5536.

"Most likely the FX market will trade with a positive bias and some fluctuations over the next week or so, but investors should bear in mind that already prior to the elections over this past weekend, the market had to some extent anticipated the joys," says a morning FX note from Jyske Markets.

Positive market conditions would tend to favour the likes of the EUR, NZD, CAD, AUD, ZAR and other such risk-on currencies.

We would have expected the pound dollar to advance in such conditions, but markets are continuing to factor in further quantitative easing at the Bank of England.

Indeed, there are signs that the relief-rally could already be running out of steam.

Michala Marcussen, of Société Générale, said:

“While Greek euro exit fears have thus eased, this outcome does little to alleviate the weak fundamentals that currently weigh on Spain and Italy.”

A wholesale risk asset reversal began once Spanish bonds saw more sellers.

The yield on Madrid’s 10-year paper is up 25 basis points at 7.13 per cent, a euro-era record, with the mood not helped by news that Spanish banks’ bad loans are at an 18-year high.

So for now, the immediate outlook for the pound sterling is hard to call in line with the uncertainty dominating markets.

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