Sterling weakened against the dollar and euro this morning as investors mulled over the risks ahead of a key Bank of England decision later in the week which could signal an end to quantitative easing.

Pound Sterling – UK Markets

The pound has extended lows against the dollar and this morning traded around 1.595 at 0923 GMT. At time of writing the losses continue, with current GBP/USD position at 1.5875. Meanwhile the euro pressured sterling at 1.149 first thing, having strengthened in trading towards the end of last week. Sterling continues to lose ground, with trading levels currently at 1.1420. Political concerns have weighed on the pound after two opinion polls over the weekend showed a general election due by June could produce a hung parliament leaving no single party with a majority. But it’s the uncertainty with regard to Thursday’s BoE meeting that is putting pressure on the pound as investors weigh the risks. Today’s significant data releases from the UK include January house prices and PMI manufacturing and December’s net consumer credit and mortgage lending.

US Dollar – US Markets

Surprisingly strong US growth data on Friday fuelled the dollar's gains at the close of the week and this morning sees US currency start the week with a bullish stance. The dollar has climbed to 1.388 against the euro and is holding steady as of this morning. The most ground, however, has been made against the pound as the greenback steadily gained a solid 70 pips in the first few hours of trading today. USD/GBP traded at 0.626 at 0946 GMT. Traders won't want to miss out on Monday’s reports as many are forecasting a short-term downward correction for the dollar in today’s trading. The Personal Spending and Personal Income reports due at 1330 GMT will carry some significance, but not nearly as much as the ISM Manufacturing PMI scheduled for 1500 GMT.

Euro – European Markets

Greece’s financial problems are still weighing heavy on the euro, which plummeted against almost every major bar the weakened pound. This morning at 0956 GMT the single currency traded at GBP0.870 and USD0.626. The euro is scheduled to be nearly absent from today's market news and could take a short-term fall as a result, with one minor release due towards market opening hours in Europe. On the other hand, with a variety of reports due from Britain and the United States, there's a chance that the euro will benefit if negative data emerges to drag down the dollar or the pound.

Other Currencies – Highlights

The Japanese yen appears to be on track to be a big winner in today's market, climbing steadily against all of its major counterparts. So far this morning, the yen has climbed against the dollar to a price of 90.20 as well as hitting 125.23 versus the euro and 143.92 against the pound as of 1000 GMT.