Reports that a secondary ash cloud is heading over the UK means that travellers are still stranded and the European Airline Industry as well as British export continues to haemorrhage money.

Pound Sterling – UK Markets

The pound fell sharply yesterday after a surge in support for the Liberal Democrats increased the chances of a hung parliament. Sterling experienced its biggest drop in two weeks against the USD as opinion polls suggested no clear winner will emerge in the elections. The big issue concerning the city is that without clear leadership and a plan to reduce the countries budget deficit, Britain’s AAA credit rating might be put at risk. Jobless statistics due out tomorrow will be closely watched, but on a positive note mortgage lending figures soared by 24% last month according to the Council of Mortgage lenders.

US Dollar – US Markets

Although data shows a 1.6% increase in March retail sales the chairman of the US Federal Reserve, Ben Bernanke, stated that weakness in the construction sector was still weighing on the economy. Tentative USD strength could be seen but it is advisable to speak to your personal broker to discuss your requirements in more detail.

Euro – European Markets

The Greek government's cost of borrowing hit a new record high on Monday following delays to Greece's economic recovery plans. European officials were due to meet in Athens earlier to agree the terms of a debt rescue package for Greece but the widespread disruption to flights has delayed the meeting until Wednesday. Yesterday the euro fell further against the dollar, dipping below $1.345. In other European news Germany’s April ZEW economic sentiment report is expected today although even a positive sentiment will have a muted effected on the Euro due to Greece (and the volcano overshadowing) .

Other Currencies – Highlights

The Goldman Sachs debacle continues to make many nervous as allegations by the Securities and Exchange Commission in US that Goldman defrauded investors during the sub-prime housing crisis are investigated. The Bank of Canada rate decision is expected today. Domestic data suggest hike from 0.25% is just round the corner, but not quite yet so any CAD buyers might want to consider locking in.