Nick Beecroft, senior markets consultant at Saxo Bank in London, looks at the key developments in the unfolding sovereign debt crisis and the political will of the European Union's architects.

Click here to listen

Senior markets consultant at Saxo Bank in London Nick Beecroft has questioned the ability of the European Union's eurozone members to keep the monetary union together.

Beecroft has given his views on the key developments in the unfolding sovereign debt crisis and the political will of the eurozone's key players in an audio broadcast for FX Week.

"The key issue on the market's mind is the eurozone debt crisis and whether the EMU is bound to fail," said Beecroft. "But it is important to understand the rules of engagement and that politicians will do everything that is expedient to get through the crisis," he commented.

He said Italy's negative outlook downgrade by Standard & Poor's and the growing risk that Spain will be drawn into the maelstrom of the crisis are key hurdles, but that they will be overcome.

"We see a gradual descent in euro/US dollar over the next six months to 1.35 which might be exacerbated by a pause in rate hikes by the European Central Bank," noted Beecroft.

"But eventually the tide will turn and either in Q4 of this year or Q1, 2012, we expect to see a third round of quantitative easing in the US as unemployment will not have decreased rapidly enough and inflation will have peaked and be coming down again," he concluded.

He added it is also possible the market will begin to look through the present risks in the eurozone and see a stronger northern Europe. He expected growth in Germany, France, Belgium, Netherlands, Finland and Luxembourg will bring strength to the euro in 2012 to beyond 1.50.