Sterling extended this week's losses against the dollar as ongoing uncertainty surrounding the outcome of the election kept the currency under pressure.
Pound Sterling – UK Markets
The pound continues to feel pressure from political uncertainty as a mixed bag of polls did little to clarify the murky prospect of a hung parliament. This morning two opinion polls showed Britain's ruling Labour Party has gained ground on the main opposition Conservatives, but a third suggested the Conservative Party had extended its lead.
This pushed sterling down almost half a percent in the currency exchange market to a session low of USD1.5149, and at 0919 GMT traded around the 1.5225 mark.
A report in a UK newspaper citing the Bank for International Settlements saying Britain will need "drastic" austerity measures to reduce public debts is also thought to have kept Sterling under selling pressure.
US Dollar – US Markets
Risk appetite was also dealt a blow after US consumer credit slumped much more than the market had been expecting, and Fed Governor Ben Bernanke continued to warn about the pressures on the recovery in the US, warning about continued foreclosures and unemployment.
Today's Unemployment Claims release is expected to have a strong impact on the U.S currency. Any result could be a surprise, and the Dollar could go either way as a result. In any case, traders are unsure how the market will react to today's data. A weak report could feed risk aversion, boost Treasuries and actually aid the U.S. Dollar.
Euro – European Markets
The Euro edged up 0.2% to 87.73 pence in earlier trading, clawing back from a seven-week low of 87.48 pence hit earlier today.
The Greek fiasco continues to weigh heavily on the single currency, which has continued to sink under the weight of the problems in Athens, as well as weak economic data after Euro-Zone final GDP for the fourth quarter was revised down from growth of 0.1% to show stagnation. At 0938 GMT the European currency traded at 1.333 against the Dollar and 0.8759 versus the Pound.
Today's announcements by the Bank of England and the European Central Bank are likely to be no more than footnotes, with monetary policies expected to be left unchanged. However, any comments Trichet makes regarding the Greece situation will be examined closely.
Other Currencies – Highlights
The yen strengthened this morning as investors moved towards the Japanese currency as a safe haven in the currency exchange market and stocks in the region extended a decline in equities worldwide.
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US Dollar Continues to Outperform European Rivals
Pound falls further
British Pound Suffers Losses Ahead of Tuesday's Critical Vote