Monday

Sterling slipped against the Euro this morning, retreating from a seven-week high. Despite its losses against the single currency, the Pound hit an eight-week high versus the Dollar. However, this rally has since stalled after Gordon Brown vowed to restore services in the UK.

Market participants believe additional gains are unlikely given the political uncertainties ahead of the UK general election, which will likely hamper UK currency until clearer signs emerge as to who will win.

By 0930 GMT Sterling traded at EUR1.1316 and USD1.5459. For those making money transfers, today’s data includes the trade balance, BRC retail sales and the RICS house price balance which gauges the cost of homes in the UK.

Tuesday

The pound was pressured this morning after data showed that UK house prices grew at their slowest pace last month since July 2009.

The Royal Institution of Chartered Surveyors revealed that its monthly house price balance dropped to +9 in March from an upwardly revised +18 in February, catching off-guard a number of economists who had forecast a rise to +19.

Other data from the British Retail Consortium showed retail sales jumped at their fastest pace in a year in March, but the figures were flattered by the earlier timing of Easter.

Sterling-specific news remains overshadowed by the countries fiscal problems and following Greece’s recovery plan, a foreboding focus is now shifting towards the British Isles as the pound feels the pressure.

Wednesday

Sterling was marginally higher against the dollar and yen in early trading, following stronger than predicted balance of trade statistics. The Pounds exchange rate has since steadied and remains hampered by political indecision prior to the May 6th ballot.

The balance, in terms of goods and services, narrowed from a revised figure of minus £3.9 billion in January to minus £2.1bn in February, reflecting a £1.2bn rise in exports and a £0.6bn fall in imports.

However, despite this progress, there are no data releases scheduled for Wednesday to push the Pound further and focus has returned to the latest opinion polls showing that Britain is still heading for an inconclusive election. This sees the UK exchange rate steady at USD1.5434 and EUR1.1302 at 0935 GMT.

Thursday

Sterling reached a seven-week high against the Dollar this morning after an opinion poll suggested the opposition Conservatives could win an overall majority in the UK election. The Pound also hit a one-week high against the euro as the poll showed the Conservatives leading Labour by twelve points in crucial marginal constituencies.

Until the release of March inflation data next Tuesday we’ll be experiencing a dry patch for UK economic statistics barring today’s consumer confidence figures for March.

The freshest figures for traders to ponder came from the Council of Mortgage Lenders, indicating an upturn in the housing market in February. However, we’ll get a more clarified idea of the housing market when seasonally adjusted data becomes available for the first quarter.

Friday

Sterling has slipped following last night’s much publicised electoral debate, suggesting volatility throughout the general election campaign looks set to continue.

Last night’s televised debate between leaders of the UK’s three major parties has further fuelled the possibility of a hung parliament. The strong performance of Nick Clegg, Liberal Democrat leader, has led to increased voter uncertainty and suggested the third party may hold the balance of power. The suggestion of a hung parliament is likely to weaken confidence in Sterling as the UK debt crisis will be deemed to be more difficult to address after the 6th May.

Nigel Hodges www.currencysolutions.co.uk