One of this week's major events is just moments away as the German Constitutional Court is expected to rule on whether Eurozone rescue fund European Stability Mechanism (ESM) is constitutional. The ruling is thought to come by 09:00 London time.

CSU party member Peter Gauweiler had asked the court on Monday to postpone the decision in order to study the European Central Bank's bond purchase plan announced last week. The request was turned down and a decision was confirmed for today.

German Finance Minister Wolfgang Schauble has repeated on several occasions that the court would reject the notion of the ESM's "incompatibility".

The market consensus also expects the fund to be ruled constitutional although some analysts do not rule out potential legislative changes in order to limit Germany's exposure in future bailouts. This scenario would certainly pressure the markets lower.

In a poll conducted by Reuters last week, 20 law professionals predicted a favourable ruling for the ESM.

This court decision is the last major challenge that the ESM must overcome in order to become effective and replace the temporary rescue fund, the European Financial Stability Facility (EFSF).

MG

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