Fiscal and political woes continue to undermine the pound and things aren’t much better in the Euro-Zone as we approach the weekend.
Pound Sterling – UK Markets
Sterling’s struggle continued this morning as worries over the UK's political situation and the ongoing threat of further BoE intervention measures piled on the pressure.
The pound still hovers near a nine-month low against the dollar having slipped yesterday. Although UK GDP figures came in this morning above expectation for the 4th Qtr at 0.3% growth (against 0.2% forecast), the pound continues to slide. It would appear that this just isn’t enough to sway sentiment and a cent has been lost against the euro since yesterday afternoon.
Fears of a debt downgrade loom but it’s thought that there’s little chance of one occurring prior to the election, which is currently thought to result in a stalemate. This has fuelled concerns that any attempts to tackle the country's escalating fiscal deficit will be hindered.
As of 1110 GBP trades at 1.12 against the EUR and 1.5245 versus USD.
US Dollar – US Markets
The Dollar's gains have become subdued since Federal Reserve Board Chairman Ben Bernanke continued his testimony yesterday and reaffirmed keeping interest rates at record lows. While helping US stocks rise, the greenback has suffered a minor downturn and currently trades at EUR1.3603.
Today's news is going to be moderate for the dollar. Later in the day we'll receive the US Preliminary GDP figures which are forecasted to show a decreasing speed of growth. Existing Home Sales figures will also be released at 1500 GMT and could potentially boost the greenback with a small increase in housing sales.
Euro – European Markets
Poor economic outlook, declining consumer confidence and a decrease in lending are ingredients for a dismal first quarter in Europe.
The Euro-Zone will be publishing its consumer price index reports, but the figures are not likely to carry a strong enough impact to reverse current trends. It is, of course, a different story against the pound as the single currency continues to make gains.
Other Currencies – Highlights
The Swiss will be publishing their KOF Economic Barometer which may show a sign of increasing market sentiment, and could help the CHF in today's trading.
Elsewhere the yen weakened as gains in Asian stocks boosted demand for higher-yielding assets.