The politically pressured pound slipped against a firm dollar as traders remain wary of making large bets in either direction before the US Federal Reserve's policy decision which is due tomorrow.

Pound Sterling – UK Markets

The pound fell against the dollar as a YouGov Plc poll published in yesterday’s Sunday Times reinforced concern that the election will produce a government without a parliamentary majority. Sterling also slipped for the first time in three days versus the euro on concern that the UK will have difficulty servicing its ballooning debt. At 1011 GMT sterling traded at 1.5038 against the dollar and 1.0970 versus the euro. London's FTSE index was down 0.2% in early trade and sterling fell nearly 0.5% against the yen as investors shied from riskier assets after Shanghai shares ended 1.2% lower. As well as the Fed’s decision tomorrow, which will undoubtedly affect GBP/USD to a significant degree, the market will be looking to the minutes of the latest BoE meeting, due out on Wednesday, which are expected to show a decision to leave policy unchanged.

US Dollar – US Markets

This week, the main news event will be the Federal Funds Rate tomorrow. Expectations are for the Fed to leave rates at their current low levels of less than 0.25%. However, they may surprise everyone and hike rates, which will potentially erase the Dollar's losses from last week. At 0959 GMT the dollar traded at EUR0.7279 and GBP 0.6954.

Euro – European Markets

The euro snapped three days of gains versus the dollar after some of the European finance ministers ruled out any aid for Greece as the nation seeks to narrow its heavy deficit. German Finance Minister Wolfgang Schaeuble and French Finance Minister Christine Lagarde threw cold water on speculation over the weekend that there will be a decision on aid for Greece at a two-day meeting in Brussels starting today. The euro suffered heavy losses against the Canadain and NZ dollar and slid against major counterparts to trade at 0.9059 against sterling and 1.373 versus the dollar at 10.09 GMT. This week, a batch of data is expected from the Euro-Zone. The main publication looks to be the German ZEW Economic Sentiment. Traders should also keep close attention to any development regarding the Greece bailout plan. This seems to be the most urgent matter at the moment, and any publication on the subject is likely to create volatility in the market.

Other Currencies – Highlights

This week, the most interesting publication from the Japanese economy looks to be the Overnight Call Rate (the Japanese interest rates announcement for the next month). Japan currently holds the lowest rates within the industrial world, and analysts have forecasted that the BoJ is likely to leave rates at their current low levels.