After initially opening the week lower yesterday on the back of nervousness about the Greek election result, European markets put to one side concerns about the politics to continue to build on last week’s gains, after German business sentiment improved for the third month in a row. So while Greek markets slipped back and bond yields shot up, elsewhere there appeared to be a belief that for all the rhetoric coming from Athens, that ultimately new Prime Minister Alex Tsipras and his coalition partners would ultimately be compelled to compromise in the coming weeks on their demands for an end to austerity and some debt relief. This seems a rather relaxed and sanguine view to take of two new political parties that to all and intents and purposes are an unknown quantity when it comes to working the levers of power, but for now, it does appear to be a fairly accurate assessment. While compromise would appear to be the most logical outcome for both the EU and the new Greek government it needs to work from both sides and it seems that EU leaders appear unwilling to do so beyond extensions to maturities, which falls way short of what Syriza and the Independent Greeks are looking for. For now there doesn’t appear to be too much of a rush given that Greece had its bailout extended until the 28th February, so for now the element of urgency isn’t quite there for policymakers on either side. There may also be a calculation on the part of EU policymakers that the uneasy alliance between the left wing Syriza and the right wing Independent Greeks might suffer from strains given their different ideologies. That may well be true in the long run but currently what unites them is more important than what divides them, and that is opposition to austerity, and for now that looks like the glue that is likely to keep them together, and EU finance ministers need to bear that in mind as they meet today to come up with a measured response. As for today the main focus away from Greece is back on the UK with the initial assessment of the UK economy’s economic performance for Q4. Expectations are for Q4 GDP to come in at around 0.6% hindered somewhat by the slowdown seen in the construction and manufacturing sectors, in the last three months of the year. The annualised measure is expected to improve slightly to 2.8%. While this would be the best annual performance since the financial crisis, it’s still below the OBR’s 3% target, however there is still scope for the number to be revised upwards since the ONS’ will only have about 40% of the data needed for a truly accurate assessment. In the US the latest December durable goods numbers are expected to show a small rebound from the disappointing November numbers, with a gain of 0.6% excluding transport. Consumer confidence for January is expected to improve once more on the back of a lower oil price with a reading of 95, up from 92.6. EURUSD – having made a fresh 12 year low yesterday at 1.1098 the euro has rebounded and as such we could well see a short squeeze back towards the 1.1470 level initially, if we manage to get above 1.1280. We need to see a monthly close below 1.1205, which is 61.8% retracement of the entire move from the 0.8230 lows and the 2008 highs at 1.6020, to suggest a further decline towards 1.0500. GBPUSD – the failure to break below the 1.5000 level conclusively suggests the possibility of a short squeeze in the near term. The key support remains at the 2013 lows at 1.4810/30. This level is likely to remain key if we are to get a rebound. We need to see a move back through last week’s high at 1.5140 or we could well be set for a move towards levels last seen in 2010 where we the pound around 1.4200. EURGBP – continues to remain under pressure with a new low at 0.7404, but does appear to be finding some support here in the short term. We could well see further losses towards 0.7255, which had originally been the peaks seen in 2003. We need to see a move above 0.7590 to stabilise. USDJPY – continues to be side-lined in a range between 117.00 and 119.00 and while we could see a retest of the 120.00 level, we could equally retest the recent lows. The key support remains just above the 115.60 level which is also potential neckline support for a forming head and shoulders pattern. A break of 115.60 could well see a sharp fall towards 110.00.. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.