EUR/GBP: Euro Drops Awaiting the German Court Ruling on ESM

Gains of the Euro were limited in the previous European trading exchanges on waning optimism as the European leaders embrace the much awaited verdict of the German Constitutional Court as to the legality of the Euro Zone’s bailout fund. As traders look to the looming decision of the German court, the single currency pared gains better figures of the French Industrial Production and Sentix Investor Confidence. As the day of judgement draws near, the shared currency is expected to fell behind the Pound in today’s European exchanges.

The Greek leaders are still trying to mend their differences as to the spending cuts required by the Hellenic Republic’s international creditors. Prime Minister Antonis Samaras, Pasok’s Evangelos Venizelos and Greek Democratic Left leader Fotis Kouvelis are set to meet tomorrow before the Eurogroup officials meet in Cyprus to discuss about the progress of the indebted country. George Soros, Billionaire investor, said in Berlin yesterday that the austerity demands imposed by Germany are what push the Europe into a deeper recession. Meanwhile, the fate of the European Stability Mechanism would be decided tomorrow, and a judgement against its constitutionality is seen to block efforts already commenced by the ECB and the European finance leaders.

As to the Cable, UK house prices declined at a slower pace in August, and surveyors expressed hopes that home sales would pick up in the next year because the measures taken by the government to pull out the economy out of recession. In view of all the foregoing factors, a short position is recommended for the EUR/GBP pair in today’s exchanges.

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