GBPEUR HIGHS- GREECE GAINS AN AGREEMENT- YELLEN- UK INTEREST RATES

First of all, what a week on the market we have seen!

Apologies to my readers for not writing anything for the past week, however I was out of the country, and unable to write any reports!

But let us re-cap on what has actually happened before we look at what's next;

We saw the Eurogroup come to a provisional agreement with Greece, they agreed that they will proceed with national procedures with a view to reaching a final decision within the next 4 months on the extension. In simple terms, they have brushed the problem under the carpet for the time being in attempt to calm the markets, as uncertainty in these volatile times is never a good thing.

Janet Yellen, the Federal Reserve Chair, presented a rather bearish testimony regarding the current economic situation in the U.S, As many of you will re-call, The U.S Dollar has strengthened by over 10% over the last 6 months due to the removal of QE (Quantitative Easing) in the US economy. We saw the GBPUSD exchange rates go from 1.72 down to lows of 1.49 recently. The main point on everyone's minds right now is when will the U.S do their first interest rate hike- Yellen addressed this issue by saying that the recent strength in the U.S Dollar needs to be controlled, as a strong currency can be damaging to a countries export and service sectors, and therefore damaging to growth; therefore interest rate hikes will be delayed.

This news was not great to a lot of traders and politicians who of course, want interest rate hikes; however personally I understand Yellen's position; with the current economic situation around the world with uncertainty and falling oil prices, all countries must remain cautious before any interest rate decisions.

Lastly, The Bank of England stated this week that they are hoping for an interest rate hike in Q4 this year; which surged the Pound against most currencies, GBPEUR hitting fresh highs of 1.3780 and GBPUSD back at 1.55.

So what's next? On Monday we have very important data releases, firstly we have UK mortgage approvals, now with the UK housing market's strength over the past 2 years, any weakness in this data may weaken the Pound slightly- We also have the inflation and unemployment figures coming out of Europe at 10am GMT; The expectation is weak on both counts however any strength in this data could lead to Euro strength- please remember that the GBPEUR exchange rate has gone from 1.35-1.37 in one week so a short term re-tracement the other way is expected.