Daily Forex Brief 29th jun

Daily Forex Brief London: Wednesday 29th June 2011

Trichet remains strongly vigilant Despite flagging up last week that Europe's sovereign debt crisis represents a serious risk to the eurozone, it appears that the European Central Bank's determination to hike rates remains unwavering. Trichet yesterday reiterated that the ECB remains in 'strong vigilance mode' implying that a rate hike next week remains very likely. Given the considerable tightening of financial conditions in Europe over recent weeks, exemplified by a very considerable retrenchment in credit provision by banks in highly-indebted countries such as Spain and Italy not to mention Greece and Portugal, their collective determination to continue to tighten monetary policy seems remarkable. Should the ECB proceed with this next move, they may come to regard it as one of their greatest policy mistakes.

Also in today's Daily Forex Brief: The tense wait before the Greek vote Germany wants a Plan B for Greece More slippage for the pound Swiss industry increasingly uncomfortable with currency strength