In what is believed to be a key week for the financial markets, the Euro heads to a month-low versus the British pound. Concerns over Greece failing to secure needed funds add to an economic slump, as shown by recent fundamental data from the region. Things look a little better across the English Channel as manufacturing production in the UK is perceived for a rebound.
The Greek government is hoping to pass two votes through parliament, with one Greek minister telling CNBC that overcoming these hurdles will end talk of Greece leaving the single currency. Greek tourism minister Olga Kefalogianni told CNBC that, “these two votes in parliament will mean that, from next week on, talk about Greece exiting the euro zone will be out of context. So it is critical.”
Athens is set to submit its latest round of austerity measures with a vote tomorrow as it hopes to receive further aid from the International Monetary Fund and the European Union. Greek politicians are also expected to approve the budget for 2013 on Sunday, releasing 31.5 Billion Euros in funds. Yet more signs of swinging cuts and tax increases have led to promises of more protests from today onwards by Greece’s main private and public unions. A 48-hour walkout, called by Greece's two biggest labor organizations, is the third major strike in two months against a package of spending cuts and reforms that Prime Minister Antonis Samaras's government is trying to push through parliament to unlock additional assistance from the troika.
From the day’s economic releases, the composite index measuring Euro-area services and manufacturing is estimated at 45.8 points, the lowest in more than three years and unchanged from preliminary data on October 24. Services PMI from Spain, Italy and the entire Euro Zone are forecast to remain in a position of contraction for the past month, extending the region’s woes even as the manufacturing sector remains in a slump. German Factory Orders for September are also anticipated to remain negative at a minus 0.3 percent rate.
In the UK, the Office for National Statistics is expected to post positive data on its Manufacturing Production for the month of September. Economists estimate a rate of change of 0.3 percent for the aforesaid period, an improvement from the previous release of minus 1.1 percent in August. This is seen to add to the optimism from the recent report which showed that the economy rose from recession in the past quarter.
With anxieties over a critical week for Greece, and with economic data from the region registering weakness, a short position is recommended for the Euro-Sterling. Expect technical price corrections to ensue.
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