The pound stabilized against the so-called “safe haven” currencies during the overnight trade after the Group of 20 nations pledged that they are committed to a “strong and coordinated” response to challenges facing the global economy. The G-20 nations policymakers stated that they are ready to tackle the challenges facing the economy, particularly from increased downside risks from “sovereign crisis, financial fragility, weak economic growth and unacceptably high unemployment”. There are no major releases or policy speeches scheduled for today, with only noticeable release being the BBA Loans for House Purchases.
The euro rebounded against the dollar and the yen during the Asian session as market risk aversion faded and stocks managed to regain some ground after G-20 nation’s pledged to tackle the problems facing the global economy. However, single currency gains were limited as Eurozone services and manufacturing data shrank for the first time this year adding to the signs of faltering economic recovery. Separately, Moody’s Investors Service downgraded the long-term deposit and senior debt ratings of eight Greek banks by two levels. As Greek banks hold the majority of government bonds analysts speculate that they will lose the collateral needed to borrow from the ECB and are likely to get nationalized. In addition, European Central Bank Governing Council member Klass Knot said yesterday that he no longer excludes Greek default. Market participants now expect for the European Central Bank to react as soon as next month should the economic data disappoint further.
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