The pound slipped to a two week low against the dollar, weighed down by the UK’s political and economic outlook.
Pound Sterling – UK Markets
Concerns over debt, growth and whether or not the next government will be equipped to tackle challenges on public finances were still hampering sentiment towards the pound as it dropped to a two week low against the dollar this morning.
The pound fell back below USD1.50 on Friday on the back of a warning from Bank of England policymaker Andrew Sentance that there was still a risk of a financial shock that could derail the recovery. By 0930 GMT this morning sterling was trading at USD1.4977 and EUR1.1069.
The pound was also driven lower amid speculation Dubai World will prolong the repayment of its loans, hurting earnings at UK banks that serviced the state-owned Emirati company.
Those looking to make a sterling money transfer later this week will be eyeing Wednesday's budget and Alistair Darling said on Sunday that there would be no pre-election giveaways, promising instead a sensible economic plan to support growth and cut borrowing.
US Dollar – US Markets
Last week several economic indicators proved that the US economy is stabilizing, which saw a bullish dollar push against the majors. This morning at 0943 GMT the greenback traded at GBP0.6693 and EUR0.7405.
Many interesting news events are expected from the U.S. economy this week. Anyone making a US money transfer will be advised to pay special attention to the Existing Home Sales, the Durable Goods Orders index, the New Home Sales and the weekly Unemployment Claims.
Traders should also follow Fed Chairman Ben Bernanke's speech, expected on Thursday as it’s anticipated that he will discuss potential interest rate changes.
Euro – European Markets
Last week the euro dropped around 250 pips against the dollar and roughly 100 pips against the pound.
The Greece debt crisis is a constant weight on the single currency’s progress. The Euro-Zone appears to be reluctant to offer a final rescue plan at the moment, and investors are responding with diminished faith in the euro. Disappointing economic data from the Euro-Zone is also dragging the currency down as the European Economic Sentiment failed to reach expectations.
Traders looking to make a euro money transfer should pay special attention to publications from the German economy such as the German Business Climate and the German Consumer Climate. In addition, the European Central Bank President Trichet is expected to deliver two speeches this week which usually results in high volatility.
Other Currencies – Highlights
The Yen rose against most of the major currencies during last week's trading session, gaining around 200 pips against the euro. This week, traders are advised to follow two leading indicators - the Japanese Trade Balance on Tuesday and the Tokyo Core Consumer Price Index on Thursday.
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