Another week comes to an end, while optimism dominates the market ahead of the results of the finance ministers' meeting and after the Greek parliament passed the expanded austerity package in attempts to control the budget deficit.
Moreover, the United Kingdom public sector net borrowing narrowed in September compared with a year earlier, where the public sector net borrowing narrowed to 11.38 billion pounds from 13.28 a year earlier, while the public sector net borrowing excluding interventions eased to 14.13 billion pounds from 15.41 a year earlier.
In addition, the current budget deficit also narrowed to 11.93 billion pounds from 12.81 billion pounds a year earlier, which indicates that the United Kingdom policy makers are on the right track to contain the budget deficit yet still leaving the economy weak. The Bank of England added more stimuli to support the sluggish growth and encourage the economy to improve, which supported the sterling pound to rebound against the U.S. dollar and the common currency.
Over weekly basis, the sterling pound could close this week with more strength against the U.S. dollar, extending the gains recorded in the past three weeks, where the GBP/USD pair started the session on Monday at 1.5826, and recorded the highest at 1.5917 and the lowest at 1.5631 and is trading now around 1.5907.
Concerning the EUR/GBP, the pair is currently giving up the gains recorded in the past week, where over weekly basis, the pair opened this week at 0.8757, and recorded a high of 0.8796 and a low of 0.8669, and is trading now around 0.8675.
Today, the pair opened in the Asian session at 1.5789, and recorded a low of 1.5753 and a high of 1.5917, and is expected to extend the upside movement and close in New York session with more gains.
The euro also rebounded against the U.S. dollar as optimism supported demand for high yielding currencies while the risk appetite improved. Tensions eased today after the Greek Parliament granted the expanded austerity package, where after international lenders recommended that Greece should obtain the sixth tranche of last year's aid package as soon as possible, Papandreou won the parliament confidence, as the Prime Minister aims to meet budget deficit targets set for 2012 after the sluggish growth prevented government from reaching any of the targets set for 2011.
Markets are optimistic ahead of the results of the finance chiefs meeting, where finance ministers gathered in Brussels today to set guidelines for leaders to discuss during the summit on October 23, yet optimism dominated markets as Merkel and Sarkozy are to meet on Sunday to find common grounds and come up with a final plan to tackle the debt crisis and prevent it from expanding into other economies.
The euro appreciated against the U.S. dollar, which heads for weekly losses, as we can see the EUR/USD pair is currently trading around 1.3810, after opening the session at 1.3778. The pair set the highest at 1.3826 and the lowest at 1.3703.
The pair is stable in areas within 1.3650 and 1.3825, however; a breach of the resistance at 1.3825 is required to confirm the upside move, while a breach of the support at 1.3650 should confirm the downside movement.
The U.S. dollar index (USDIX), which tracks the dollar's movement against a basket of foreign currencies, started the day at 76.92, and recorded a high of 77.20 and a low of 76.63, and is currently hovering around 76.70.