Euro Volatile

The fallout, from the Greek election this weekend, has so far been contained - with the euro broadly flat against the pound and dollar. The prospect of ECB led QE is the main factor behind the relative calm across the currency markets. The euro will be sensitive, in the short-run, to statements from the new Greek government and troika about debt forgiveness. However, comments from both sides over the coming weeks should be viewed as opening gambits in protracted negotiations rather than feasible policy choices.

Eurozone data for the rest of the week is focused on Germany, with unemployment and inflation numbers expected to show a flat labour market and falling prices, conditions which the ECB hope QE will improve once the program starts in March. First estimates of UK Q4 GDP are due this morning. The UK economy is expected to slow, registering growth of 0.6 per cent in the three months leading to December; down from 0.7 per cent in the previous quarter. Across the whole of 2014: the economy is forecast to grow by 2.6 per cent - the strongest annual increase in GDP since the financial crisis. The pound is trading slightly higher in anticipation of the GDP release but the risk to Sterling remains to the downside should the number not meet expectations. Ahead of the Federal Reserve meeting tomorrow evening, US durable goods orders are expected to show a moderate improvement from December and consumer confidence is forecast to rise once more.

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