After a good day the euro fell sharply against sterling as the European Central Bank (ECB) announced that they would stop accepting Greek government debt as collateral from Greek banks as of the 11th February. As the ECB is their lender of last resort and the only lender willing to lend to the Greek banks at this moment it is clear that the ECB is playing hard ball with the Greeks and their attempts to renegotiate the agreed austerity measures. Against the US dollar though the euro just about held its own as data out of the US wasn’t as positive as hoped for.
Early this morning we saw important German manufacturing orders data but the key event will be the meeting between the Greek and German Finance Minsters. The ECB may hold the power but Germany holds the purse strings for the Eurozone. Will we see fireworks or will there be sweetness and light between the two? Time will tell.