by Brian Miller
Sterling has jumped +0.55% versus the euro today to reach 1.2890, extremely close to a 7-year high, its strongest since March 7th 2008.
The pound has strengthened, both because Greece's finance minister has warned that Greece's exit from the Eurozone "could happen".
Sterling has also risen, as the European Central Bank is "in a position" to launch emergency monetary stimulus next week, says ECB executive Benoit Coeure.
Sterling rises, as Greek exit "not necessarily a bluff"
The pound has hit 1.2980 today, firstly because Greek finance minister Gikas Hardouvelis has warned that Greece's "leaving the euro area is not necessarily a bluff."
Mr. Hardouvelis signalled today that anti-euro sentiment may rise following Greece's forthcoming general election, and that "an accident may happen."
This lifted sterling, because were Greece to exit the Eurozone, it would open the door to other indebted countries such as Italy leaving, calling into question the viability of the common currency.
Pound strengthens, as ECB "in a position" to launch stimulus
Moreover, the pound has also risen, as European Central Bank executive Benoit Coeure has said that the ECB is "in a position" to launch emergency monetary stimulus next week, on January 22nd.
This boosted sterling versus the euro, because it raises the odds that the ECB will initiate quantitative easing, whereby it injects trillions of euros into the financial system.
Were the ECB to begin quantitative easing, it would lift prices in the Eurozone, thereby avoid deflation. However, it would also devalue the currency, lifting the pound against the euro.
