Sterling rose against the dollar and was steady versus the euro today after an opinion poll suggested that May’s general election would give the Conservatives an outright majority.
Pound Sterling – UK Markets
A poll showed the opposition Conservatives gaining 39% of the vote, with the Labour Party on 26% forecasting an outright majority win for the Tories.
Earlier at 0905 GMT, sterling was up 0.3% against the dollar at USD1.5103 and currently at 0954 GMT trades slightly above that level at USD1.5139.
However, the pound failed to make much of a case against the euro which was steady in early trading and currently sits at EUR1.1012.
Investors are remaining cautious as recent polls have suggested the election could result in a hung parliament, which would potentially hamper any incoming government's efforts to cut the UK's expanding budget deficit.
With not a great deal of note on the UK data calendar today, investors await a speech by BoE Monetary Policy Committee member Spencer Dale at 1100 GMT.
US Dollar – US Markets
The dollar remained lower against higher yielding currencies today, after mixed economic data published yesterday. Crude Oil prices remained largely unchanged on concerns of Chinese monetary policy tightening which may curb the country's demand for commodities.
Yesterday data showed that first time unemployment claims fell to a seasonally adjusted 462K, down from a revised 468K in the previous week, however, the result was higher than the expected 456K. Also released on Thursday came figures showing that the US trade deficit shrank to USD37.29 billion from USD39.90 billion in December.
At 1004 GMT the greenback traded at GBP0.6637 and EUR0.7295.
Today traders are recommended to follow the release of the Retail Sales at 1330 GMT and the Prelim UoM Consumer Sentiment at 1455 GMT. If the results are better than expected we may see a stronger dollar going into next week.
Euro – European Markets
The euro gained on the dollar in early trading on signs Greece's deficit crisis has been contained, despite the clashes taking place at the moment as protestors made their feelings known about cuts.
The single currency received a slight boost today from better than expected Trade Deficit data. However, it then declined again as investors learned the fall was due to a drop in both imports and exports. AT 1009 GMT the euro traded against sterling at 0.9097 and 1.3707 versus the dollar.
Investors should pay attention to the release of Euro-Zone Industrial Production data due for released at 1000 GMT. A good result may help strengthen the single currency further.
Other Currencies – Highlights
The yen declined to a more than two-week low against the euro as the government signalled that it’s ready to intervene to weaken its currency should “markets move too abruptly.”
Pound Sterling Recovers Modestly on Strong Retail Sales Growth
Dollar Rally Loses Steam on Mixed Data
Pound's freefall continues despite the upbeat employment report