The Euro lost to the Great British pound in the previous European trading session despite speculations that Spain is coming up with new economic reforms that bring it closer to making a formal request for rescue funds from the Euro Zone’s bailout fund. In Greece, the government officials and the troika decided to take a break from inconclusive talks about the spending cuts required by the country’s international lenders.
Conflict between Germany and France was once again highlighted during the weekend when Chancellor Angela Merkel and President Francois Hollande clashed on a timetable to activate a joint oversight of the region’s banking sector. Hollande favors an early activation, while Merkel said that results are what financial markets are waiting for. This month, the German Constitutional Court rendered judgement in favor of the Euro Zone’s bailout fund, the European Stability Mechanism, but emphasized the condition that larger countries should be given more votes as to decisions on the supervision of Euro Zone banks.
Last week, German Finance Minister Wolfgang Schaeuble warned about rushing ahead with plans of the European Central Bank’s banking supervision, which seemed to have been reiterated by Merkel during her meeting with Hollande. More problems relating to the activation of a banking union, are expected to delay an important solution to the debt crisis. For the Sterling, it is expected to gain versus the single currency on Spanish and Greek concerns. As such, a sell bias is recommended for the EUR/GBP pair in today’s European trades.
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