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The confidence vote in George Papandreou passed without too much problem last night with the PASOK party winning by 155 to 143 with 2 abstentions. The votes went down party lines for the most part and so the focus will now shift to next week’s vote on austerity measures. It looks like that the austerity and privatisation measures will pass following the positive result yesterday and the euro has eased higher versus the US dollar overnight and remains at near term lows in GBPEUR.

German Chancellor Merkel spoke yesterday and said that a solution to Greece’s sovereign debt crisis requires EU solidarity, Greek commitment to the programme, and the voluntary participation of banks in extending their current lending to Greece. This sums up the hoops that the Europeans must jump through over the coming months to deal with the issues presented by the periphery. The confidence vote last night was just the first step.

Data from the Eurozone is becoming a slight issue however as characterised by the ZEW German sentiment figure that fell for a fourth consecutive month to -9.0 in June versus +3.1 in May. The result disappointed versus the consensus forecast of -3.0 and was the weakest since Jan’09.

Today is Bank of England minutes day and we expect the vote count to show a split that is not as hawkish as previous given the departure of Andrew Sentance who had been calling for a rate hike of 50bps. His replacement, the new external member Ben Broadbent, is expected to have voted with the majority in favour of steady rates.

The FOMC will announce its monetary policy decision at 17:30 BST, followed by the press conference with Fed Chairman Bernanke at 19:15. The Fed is likely to confirm that it will complete its QE2 purchase program by the end of the month and it is widely expected to continue reinvesting the proceeds from its securities holdings into Treasuries. We expect any language to continue to be of the “rates staying low for an extended period” ilk as well.

Latest exchange rates at time of writing