The pound was little changed against its major rivals during the overnight trade before European leaders create the feasible solution to the debt crisis in the region. Prime Minister David Cameron warned that turmoil in the euro area is having a “chilling effect” on the UK economy. Looking ahead to today, BoE Governor Sir. Mervyn King and his deputy Charles Bean will attend parliament to answer questions from members of the Treasury Committee on the topic of additional quantitative easing. This follows the MPCs announcement of a further 75 billion pounds gilt purchase at the October policy meeting. Also scheduled for today is the BBA lending data for September and current account data for Q2, with expectations for a current account deficit to remain at the same level as previous month.
The euro dropped against most of its major rivals during Asian session as European banks snubbed the idea on the size of the loses they were suggested to accept on the Greek bonds, decreasing the likelihood of a deal at tomorrow’s summit. Eurozone leaders are seeking an agreement on bolstering the region’s rescue fund, recapitalizing banks and providing debt relief to Greece to avoid crisis spreading to Italy and Spain. On the data front, German and French consumer confidence numbers came out better than expecting providing some relief for the single currency. Expect for the euro to experience an excessive volatility ahead of the tomorrow’s EU summit in Brussels.
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