I expect there will be further GBP weakness in 2013 but for the time being (subject iof course to worse data) the immediate pressure is off. Talk yesterday of political issues in Spain caused some Euro weakness and helped the pound to claw back some of the losses from Friday.
The next milestone before Thursday’s big news is this morning at 09.30 with UK PMI Services data which will underline whether yesterday’s GBP strength was justified.
All eyes are probably on Thursday however. There is a Spanish bond auction too this week so it will be interesting to see how GBPEUR reacts. Without some overly negative GBP news I cannot see a real move below 1.148 and even with some negative Euro news I cannot see a move above 1.20.
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