The pound rose on Wednesday morning on the news that David Cameron had successfully negotiated a coalition government with his Liberal Democrat counterpart, Nick Clegg. Pound gains were bolstered by mainly positive unemployment figures and an increase in average earnings. However the flames were doused by Bank of England Governor, Mervyn King, whose address to the media pointedly commented that there are still serious downside risks to both growth and recovery in the UK. King also refused to rule out any additional quantitative easing measures sending the pound sharply lower.


Impressive GDP figures from individual Euro Zone member countries as well as a fleeting return to risk appetite afforded the euro some welcome relief early on in the session. However, the single currency eventually came off the boil as GDP figures for the Euro Zone as a whole were released in line with expectations. Industrial production was up for the bloc and this capped the single currency’s losses. The euro still remains vulnerable to selling as concerns over sovereign debt linger in spite of the $1 trillion financial assistance package announced earlier in the week.


The US dollar continues to be the currency of choice despite succumbing to some early pressure in Wednesday’s session. The US trade balance for April also gave investors further reason to back the US dollar. The balance deficit increased to its highest level in 15 years as consumer and corporate demand fuelled imports to the world’s largest economy.


Today’s release calendar is rather light with the UK’s trade balance and US import and export prices, all for the month of April. The US will also see weekly jobless claim figures announced.


• United Kingdom
Trade Balance (Apr)

• United States
Import/ Exports (Apr)