The Pound is under pressure following Gordon Brown’s resignation as Labour party leader yesterday. The resignation brings about more uncertainty over which way the Liberal Democrats will swing for a coalition deal and weakened the Pound last night within minutes. The Euro, however, returns to its downtrend trend after an incredible short-lived surge, as reported yesterday.

Pound Sterling – UK Markets

Sterling fell by more than a cent against the Dollar in the two minutes immediately following Gordon Brown’s resignation yesterday evening. The resignation has been seen as a manoeuvre in courting the Liberal Democrats and has re-opened speculation that a coalition could be formed by either Labour or the Conservatives with the Liberal Democrats. A quick decision creating a clear majority with a clear ability to cut the deficit is what markets believe is needed to ensure the strength of the Pound. Despite the ongoing election aftermath, the Pound is making gains on the Euro. In tune with trends of the last few weeks, this is due to the volatility in the Euro rather than the state of the Pound – the most recent shift mirrors short-lived confidence in the latest European rescue package to sufficiently curb the Euro-zone crisis.

US Dollar – US Markets

The Dollar has been experiencing volatility as a reflection of the up and down nature of the Euro over the past three days. As investors showed signs of short-term confidence in the Euro, which has now dwindled, the Dollar has again been made the main benefactor of money flowing away from the Euro so far today. It is making gains on both the Pound and the Euro. There are some key data releases due today in the US including consumer confidence figures and the results of economic optimism surveys.

Euro – European Markets

Following yesterday’s remarkable strengthening of the Euro after the announcement of a hefty $1 Trillion package to stop the spread of Greece’s troubles, there has been an equally remarkable downturn. The initially optimistic reaction to the rescue deal has now faded as the Euro has lost yesterday’s gains and the downward trend remains intact. Markets seem to have decided that adding liquidity is not sufficient to curb the crisis in the Euro zone as it is structural issues that lie at the heart of the problem.

Other Currencies – Highlights

The Brazilian Real is making news as international investors are the most bearish of the Brazilian Real in three months. Currency Solutions are able to offer very competitive BRL rates so please contact your broker to discuss your needs. The Polish Zloty has lost gains as its' trading with Europe does not now look as positive following the renewed downtrend in the Euro.