By Nigel Hodges of Currency Solutions

There is one man who embodies Sterling performance in the currency market this week: Andy Murray. Plucky, dynamic, with outbursts of brilliance but ultimately outperformed by a stronger rival. This week the markets have been much like a tennis match, some short-lived spikes, unforced errors, rebounds and consistent rallies - but the Pound, like Murray, remains plagued by a nagging failure to follow through.

Major news this week has come from the US with only soft data released from the UK and Europe. Lehman negotiations have been the Achilles heel of the US performance, dashing any confidence the Fed may have succeeded in whipping up through the effective nationalisation of Freddie Mac and Fannie Mae.

As the institutions responsible for over 12 trillion dollars worth of mortgage debt in the US, the Federal bail out of Freddie Mac and Fannie Mae was designed to engineer stability and stimulation in the flagging US property industry. Yet any positive effects for the dollar were short-lived, dominated by the Lehman Brothers news later that week.

Lehman Brothers, the 4th largest investment bank in the US, failed to negotiate a deal with Korean Development Bank with the breakdown sparking fears of a lack of liquidity within the Bank. Following the announcement on Tuesday, Lehman shares plummeted by 45% with the memory of Bear Stearns too close for comfort for many market watchers.