A Greek poll survey over the weekend suggested that people were more in favour of a pro austerity Government. This has given the market a little respite and we have seen some risk appetite in the market, with stocks in Europe regaining some of their losses after seven days of getting hammered.
The situation in Spain seems to be getting worse on a daily basis. All of the major Spanish Banks have had their credit ratings cut by S & P, indicating that the situation could be far worse than what is being revealed.
The UK would plunge even deeper into recession with a GDP contraction of up to 2% if Greece is forced into a disorderly exit from the Eurozone. In that event the Bank of England would have to step in with further quantitative easing, stepping up its existing £325bn programme with a further £200bn.
On a positive note, we have seen growth in the service sector and a good measure of this apparently is looking at how well hair dressers and salons are doing and they are doing quite well.
A report by Ernst & Young also said that due to lowering inflation the amount of disposable income per individual will increase by the end of the year and go up further in 2013. They also believe that this money will filter out to the high streets, contributing to growth.
For a live exchange rate login to RationalFX now, or call +44 (0)20 7220 8181.