The European Banking Authority’s (EBA) tests showed just eight banks failed the tests yet it is believed that tests did not go far enough and did not take into account a sovereign default. This allowed Sterling to reach a 6 week high against the Euro on Monday before falling back as the week progressed. Sterling / Euro is currently sitting just above 1.13 on Interbank.
The Swiss Franc is benefiting from the risk of contagion in the Eurozone and the added fear that the US government may not agree on raising the debt ceiling before the 2nd August which would cause a default in American sovereign debt. Sterling / US Dollar is trading just under 1.61
The minutes released from the last Bank of England meeting showed that committee members voted 7-2 to keep interest rates at 0.5% and also 8-1 on holding the quantitative easing program at £200bn. It was also indicated that they expect very modest growth in second quarter GDP figures, Thus the likely increase in raising interest rates in the UK seems further away.