Forex Market Review – Euro falls below $1.27; pound falls on dovish BOE

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Euro bearishness continues amid political uncertainty in Greece after the country called new elections, sending the currency below $1.27 for the first time in four months. EURUSD edged lower to a low of 1.2680 in the European trading session as fears surround a possible Greece exit from the euro.


GBPUSD tumbled 0.6 percent from the Asian session to a one-month low of 1.5888. Sterling is weighed by a dovish Bank of England which gave a gloomier outlook in UK growth ahead, raising the possibility of more QE3. Bank of England Governor Mervyn King left the door open for more stimulus measures despite high inflation and a fall in jobless claims. But the BOE took a gloomier view of growth ahead.


EURGBP rose on the back of a weaker pound and was just shy of the key 0.8000 level. In early European session trading the euro had plunged to a new 48-month low of 0.7948 before bouncing to 0.7997.


USDCHF nudged higher to a new four-month high of 0.9469 in early European trading on continued dollar strength due to safe haven demand. The greenback has gained 4.7 percent against the Swiss franc so far this month.


USDJPY finally broke out of a range and rose to 80.50, the highest level since May 3. The focus is on the Federal Reserve policy meeting minutes to be released later today which will give details of the April FOMC meeting. Markets will look for any hints on more quantitative easing. This would be negative for USD.


AUDUSD plumbed to a five-month low of 0.9869 in the early Europe session before recovering some losses to 0.9912.