EURUSD
Euro zone banks have been under pressure to improve capital ratios. The thinking is that this is being done partly by selling foreign assets and taking the money home - probably one reason for euro resilience. The extent to which that has happened and how much more needs to be done may become clear later this week. French banks Societe Generale and BNP Paribas report results on Thursday and Friday respectively.
GBPUSD
Tuesday's manufacturing PMI may briefly halt flows into sterling. But some investors are using sterling as a substitute for Swiss francs. If the euro zone's economic and financial troubles escalate, then flows into sterling are likely to accelerate. The UK's AAA rating also means that most of the 160 bln-plus pounds of government debt due to be issued this financial year is likely to be bought by overseas investors.The idea that the BoE will hold off on further QE and reserve diversification by central banks in emerging markets are also pluses.
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