$ vs £

very tough to predict how the election will affect the currency. All depends on how close it will be. Most probably the pound will slump a bit when things are unclear.

1.45 in my opinion, Dollar is very weak at the moment. The US economy is picking up as well a bit better than the UK. Looks to me as though the Fed are likely to increase their interest rate over the next year considerably and i am pretty confident the BoE won't be increasing the rates anytime soon. I cant see more than a point interest raise over the following yea in the UK.Then there's the business of the election, hung parliament will obviously have its affects on decision making and such, Its obviously dificult to tell at this point how its all going to pan out but the indicators at the moment suggest that the tories aren't going to win with a majority.

:: United States Dollar: The Pound has maintained its gains and pushed higher against the US Dollar for this morning. Cable broke 1.6300 early yesterday reaching a high of 1.6312, but a sell off took the currency pair back down to 1.6260. Support coming in at 1.6250 to help prevent any further falls. As we entered the US session we saw US jobless claims rise and retails sales fall, but US business inventories rose - some positive. News also state side that Obama has said Wall Street must repay taxpayers for bailing them out, all seems to have enabled Sterling to continue its gains. Cable saw a high of 1.6345 overnight opening slightly lower this morning at 1.6309 currently.


:: Euro: The single currency has fallen off from its recent gains against the Greenback. The currency pair declined from the get go yesterday despite Eurozone industrial productions coming in better than expected. A sell off of the EUR/USD being the main reason for this, but the Euro would not have been helped by the ongoing Greece situation or on comments from Germany''s Merkel that tough years are ahead for the Euro. This has seen EUR/USD drop to currently sit at 1.4395. Sterling has gained on the back of the poor European data. Any time Greece was mentioned the Pound seems to gain against the Euro and this is probably why we currently ride high at 1.1335.

:: United States Dollar: Cable saw losses during Fridays session, but is sitting higher this morning. A fall for GBP/USD took the currency pair from above 1.6320 for the start of Friday's session, down to 1.6230. This was on the back of a Scottish newspaper interview with UKs Darling where a "very moderate" outlook for the UK economic recovery seemed to show a less bullish view than that of other MPC members earlier in the week. Strong demand for GBP/JPY and the selloff of EUR/GBP before the start of todays session has helped the Pound recover from the losses and sees GBP/USD open this morning at 1.6328.

:: Euro: The single currency has continued its descent against the Greenback. The Euro was sold off on Friday and took EUR/USD down to 1.4340. This was on the back of rumors that German Chancellor Merkel was set to resign, Trichets comments that Europe has a major debt problem, disappointing Eurozone trade data and further Greece concerns. There really hasnt been a lot going well for the Euro recently. Some of the losses have been recovered though for this morning and EUR/USD opens at 1.4384. Sterling sits a little higher against the Euro for this morning. The currency pair temporarily dipped below 1.1300 on Friday, but gains since now see GBP/EUR back above the big figure at 1.1349.

:: United States Dollar: The Pound has jumped against the Greenback overnight. The currency pair reached a new 30 day high of 1.6425 overnight as Cadburys finally agreed the takeover bid from Kraft. Throughout Monday Sterling had pushed to break 1.6400 versus the US Dollar after support came in for the Pound from the better than expected house price data and on further speculation the BoE will suspend QE at next months meeting. A lot believe that Sterling recent upward movement also has a lot to do with it being oversold the past few weeks, but the recent data releases would have aided Pounds gains. Cable opens this morning at 1.6414.

:: Euro: The Euro has gained against the US Dollar, but fallen against the Pound for todays start. The single currencies gains against the Greenback have been minimal and probably down to the holiday session in the US. Comments from ECB's vice president Bini Smaghi that bank lending in the Eurozone may deteriorate and hamper the blocs recovery added to the single currencies recent woes. EUR/USD starts the day at 1.4393. Sterling has risen further against the Euro. The agreed takeover bid for Cadburys took the currency pair up to 1.1409 overnight and these gains have maintained for today start as we see GBP/EUR currently sat at 1.1398.

This was on the back of rumors that German Chancellor Merkel was set to resign,

eh? what rumours?

It had something to do with this and the news wires were buzzing!!!!!!!!

The opposition Social Democrats in January will try to question Chancellor Angela Merkel over the deadly Afghan air strike affair as they broaden their political attack on the government.
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German Chancellor Angela Merkel meets leaders of the other two parties in her centre-right coalition on Sunday in what media have dubbed a "crisis meeting" to thrash out agreements in several key policy areas.

Merkel's second term has been dogged by bickering between her conservatives, their Bavarian sister party and the pro-business Free Democrats (FDP) on issues ranging from Afghanistan to planned tax cuts and healthcare reform.
A market rumour early on Friday that she was to resign, swiftly dismissed by a government spokesman and later by Merkel herself, sent the euro down about half a cent against the dollar in Asian trade.

: United States Dollar: Sterling has fallen from its gains against the Greenback for this morning. The majority of gains for cable occurred on the back of Krafts new and improved bid for Cadburys, which saw the currency pair break 1.6400. Further gains were also seen on the release of UK CPI data coming in greatly better than expected. GBP/USD couldn't maintain these gains for todays session as the Fitch Rating managed to bring about concerns once more for the UK budget deficit. BoEs Governor King also didnt help the Pounds downward movement on a less than hawkish view on the QE policy. It seems we will be taking a "wait and see" approach on how we handle the policy. USD strength would have also had its play and has been strong across the board. GBP/USD opens at 1.6257.

:: Euro: The single currency sits lower against the US dollar. An early fall from 1.4400 was seen yesterday as German ZEW data came in worse than expected. The continuous falls for the Euro would not have been helped also by the ongoing rating agency wariness surrounding Eurozone budget deficit and the strong off of EUR/GBP. A strong USD was seen During the US session overnight and has pushed the currency pair down to open at 1.4187. The Pound has gained against the Euro on the back of this. A push to try and break 1.1500 has been seen for GBP/EUR in the past few hours, but unsuccessfully and we see it opens todays session at 1.1469.

what a strange market. after the understandable dip of the pound yesterday, it decides to rally today

United States Dollar: The Pound has made some ground on the US Dollar in the last 24 hours.
The push higher started yesterday morning as BoE MPC member Sentance commented that the UK economy was stronger than what the recent UK GDP data suggests. Risk sentiment was buoyed later that afternoon by a more upbeat US FOMC statement, although the Fed reiterated that it would keep rates low for an extended period of time. President Obama's State of the Union address also helped risk demand, as he pledged to double exports amongst other positive intentions. GBP/USD pushed to a high of 1.6240 yesterday on all of this and is looking to push through these highs this morning. It trades at 1.6245 currently.

Euro: Euro sentiment remains weak.
EUR/USD was sold below the 1.4000 figure, eventually falling to a low of 1.3968 overnight. This time last month it was well through 1.5000. Whilst concerns linger on over the state of many European state purses, German CPI Inflation data failed to lift the currency, coming in at -0.6%. EUR/USD has recovered a little since though, buoyed only it seems by the slight turn in risk sentiment. GBP/EUR meanwhile continues its slow advance and has managed to break 1.1500. It trades this morning at 1.1575.

Data Releases:
AUD: CB Leading Index, NAB Quarterly Business Confidence, Private Sector Credit
EUR: German Unemployment Change, Consumer Confidence
GBP: GfK Consumer Confidence
NZD: Building Consents, Trade Balance
USD: Durable Goods Orders, Unemployement Claims, Fed Chairman Nomination Vote