Sterling faced heavy selling pressure for most of last week as the political and economic stability of Britain remained uncertain. Sterling slumped to 11 month lows against a basket of currencies as industrial output and trade balance figures came in below forecast. As well as this, the continuing lack of a clear majority lead in recent election polls has allowed sterling to face heavy selling pressure, although some respite was allowed on Friday as polls did begin to suggest that the Conservatives would look to gain a majority in the May elections.


More political instability within the euro zone has allowed the single currency to be weighed down especially against the US dollar, as uncertainty into Greece’s fiscal health has kept trade into the euro fairly thin. With the EU due to meet today to finalise a bail out package for the troubled state, the single currency could look to receive a boost.


Lastly markets are hotly anticipating the FOMC meeting tomorrow to outline fiscal policy making to support the US economy as it continues to make strong economic recovery. Recent positive data has allowed investors to hope that the Fed will look to raise interest rates sooner than their recent statements for an ‘extended period’.


The US has further data due out for release today, TICS figures, Industrial production data and NAHB housing start figures will all be looked upon for clues to the direction of policy making in tomorrow’s session. In the euro zone markets see the release of Employment figures whilst no data due for release in the UK will see investors trade on sentiment erring on the cautious side.