Drinks all around as Cyprus agrees bailout

As the crisis in Cyprus continued to weigh on market sentiment we saw some positive retail data continuing to show support for the UK.Drinks all around as Cyprus agrees bailoutFriday saw an unexpected fall in business sentiment and expectation in Germany adding further fuel to the negative fire that is burning in the eurozone.

Overnight however, Cyprus along with the ‘troika’ agreed on a bailout to save the nation and keep the country in the euro at the cost of large shake ups in the banking sector with failing lenders being split into good and bad banks and a one-time levy imposed on bank deposits, which is rumoured to be up to 40% on amounts over €100,000.

On the back of the good news the markets have rallied however, the Euro is still struggling to find its feet again as investors digest the bailout and repercussions. GBP/EUR is holding just above 1.17, EUR/USD struggling at 1.2980’s and GBP/USD sitting snugly at 3 week highs over 1.52.

Looking ahead in the UK, this week we have mortgage approvals on Monday which are expected to show an increase.

The final revision of 3rd Quarter GDP figure on Wednesday is expected to reaffirm that the U.K. is on track for a triple dip recession coming in at -0.3%.

Next month’s GDP figure will be interesting to see how the U.K. has fared in the first quarter of 2013 and if it has, as chancellor Osborne said, avoided a triple dip recession.

This evening Ben Bernanke is speaking to the London School of Economics, which is unlikely to cause any volatility.

Core USA durable goods order are expected to show a sharp fall this month to 0.5% from 2.3% with New Home Sales expected to have slowed down last month also.

The big ticket data will be Thursday’s final GDP revision figure that is expected to be adjusted upwards again to 0.5% growth versus 0.1% last quarter.

Also on Thursday, initial jobless claims (expected to rise slightly) and continuing claims (expected to decrease slightly) to produce signs of a more stable jobs market.

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