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Friday’s markets remained jittery with traders still looking to sell the euro even after strong industrial figures, robust GDP and high inflation during the previous week. The single currency has not been helped in the overnight exchanges either with the arrest and subsequent charging of the IMF Managing Director Dominique Strauss Kahn on the suspicion of attempted rape. What impact his absence will have on the negotiations surrounding the potential re-bailout of Greece remains to be seen but it is acting as a weight on the euro at the European open.

Eurozone leaders are due to meet this morning to further discuss solutions for the Portuguese and Greek debt problems. The landscape is increasingly becoming political as opposed to being based on economics as German politicians in particular battle with the electorate about whether to pump more money into Greece without asking for more stringent austerity measures. Combine this with an upwards sloping inflation curve and there are some serious questions for the ECB to answer come their next meeting as Greece is unlikely to be able to come back to the financial markets for funding in 2012 as the original bailout suggested. The euro has fallen to a 7 week low against the dollar in Asian trading overnight but remains stable against the pound as this seems to be a dollar move.

Sterling was quiet on Friday but is set up for a busy week with a data calendar that includes the April CPI on Tuesday, unemployment and the minutes from the BOE on Wednesday, and April retail sales on Thursday. The MPC will have had the inflation expectations published in the QIR at the May and as such the key will be to watch for the sentiment of those who are voting for “no change” voters to see whether this is changing to a more hawkish way of looking at things or whether growth concerns will keep them in their box.

The calendar is quiet today with only EU inflation at 10.00 and Empire manufacturing at 13.30 to worry about. 

Latest exchange rates at time of writing