t is starting to sound like a bad joke but for yet another weekend that all eyes around the world were focused on the Greek issue and the ongoing negotiations between Greece and its creditors they didn’t come up with a solution. After an agonizing weekend of meetings after meetings it seems that the drama of the Greek government continues as the European Union is divided between the countries that want to come to some kind of solution and Germany’s block that remain the hard-liners of the party.
Even though late last week and especially on Friday there was optimism that a solution would be reached over the weekend since Greece’s proposal was pretty much around what its creditors wanted it seems that as soon as Germany smelled weakness they wanted more. The group of countries led by the Germans including mainly people from Northern Europe demanded a fresh round of measures that have again led negotiations to a dead end.
As such any bullish sentiment that developed early on Friday gave its place to doubts again as the creditors announced their demands and the Euro that had benefited from the early signs of a possible deal pulled back. The Single currency had rallied to 1.1200 on Friday morning but the new demands from Germany and co. pressured the currency down to 1.1100 and this morning it’s trading somewhere in between.
Once again, the Euro’s short and medium-term outlook hinges on the result of the Eurogroup meetings and the negotiations between the two parties. Investors and traders have pulled out from the Single currency and hold a waiting stance as time runs out for a solution to be found. A successful resolution of the situation should prove positive for the Euro and most likely send it above the 1.1200 barrier with the 1.1300 area being the next target in focus but a breakdown in talks opens up the 1.1000 support floor again.
Unlike the Euro, the Cable ended the week strong as on Friday the Trade Balance report from the UK printed in a bullish fashion allowing the British currency to breathe a bit easier after a difficult week. The Cable had found support ahead of the 1.5300 level and the bullish report helped claw back some of the losses earlier in the week rallying to the 1.5550 level. The outlook at this time appears mixed and we will need more hints to confirm the reversal of the British currency towards the upside.