Exciting fortnight in the Forex world

As figures revealed an improving US economy and hopes were pinned on an agreement in Greece, the pound climbed to a high of two weeks against the dollar on Friday. The pair consolidated at 1.5574 by the end of the trading day, jumping 1.9 per cent since the week’s low of 1.5276 on Monday.

The upswing marked an announcement on Friday that Greece was close to reaching an agreement about restructuring its debt and securing more international aid. General concerns in the eurozone also eased on Thursday when auctions in Spain and France attracted solid investor interest.

Officials figures from the UK have revealed that retail sales were up 0.6 per cent in December after dropping 0.5 per cent the month before when retailers slashed prices to entice shoppers out. This positive news came after a report earlier in the week showed inflation had fallen from 4.8 per cent to 4.2 per cent from November to January last year. It is hoped that the Bank of England will be able to relax monetary policy further as the decline backs up its prediction that inflation will fall this year.

As finance ministers from the eurozone meet in Brussels today, it is thought that a Greek restructuring deal could soon be made, and investors will no doubt be looking in that direction this week. Preliminary domestic gross product figures from the US and the UK for the fourth quarter will also be eagerly awaited by the markets.

The Bank of England will be publishing minutes from January’s policy meeting, with Governor Mervyn King from the BoE speaking tomorrow. This event will no doubt be scrutinised closely and investors look for hints about the direction of the UK’s monetary policy.