As the country thaws out and normal service resumes after another snow-shaken week, it’s time to start thinking about how the market will be shaping up as we trudge towards the end of January 2010.

Last Monday saw the pound climb against the dollar and the euro, however gains were capped as investors remained wary of the UK's mounting debt and political uncertainty. The dollar was certainly on the backfoot as the market responded to disappointing US non-farm payroll data released the previous Friday.

In addition to the market data the continued speculation surrounding Cadbury and the possibility of improved offers lent sterling some support. French Industrial Output came in stronger than expected which gave the euro a lift against the dollar.

Tuesday saw further selling of the greenback as the pound moved into pole position following a round of good data. The British Chambers of Commerce’s economic survey for the fourth quarter of 2009 noted that there had been improvements in many areas of the British economy, particularly in manufacturing.

Retail sales figures for December were also uplifting, but it should be noted that there may have been a fair amount of front-loading prior to the VAT increase and January’s figures are liable to drop. Another poll from the Royal Institution of Chartered Surveyors reveals that UK house price growth slowed in December, marking the first fall since February’s low point.

The pound made significant gains against the dollar on Wednesday following comments from a BoE policy maker whilst the dollar itself struggled against sterling. Things weren’t looking so good for the euro, dragged down by Greece’s not so healthy fiscal complexion, an issue that continues to hamper the progress of the European currency this week.

Elsewhere, risk appetite took quite a flogging after China’s decision to increase their required reserve ratio (RRR) for its commercial banks by 0.50%, thus obliging financial institutions to hold onto more of their deposits as reserves.

By Thursday the Aussie was up and the US dollar still skulked quietly as sterling recorded a one-month high against the greenback. The euro also traded higher against the dollar after hitting a high last reached back in December.

The market mover on Friday was a rumour that circulated the Far East indicating that the German Chancellor, Angela Merkel, was ready to resign her position. The rumour was swiftly denied by a German Government spokesperson but the damage proved irreparable as the Euro sank quickly.

Onto the week ahead and the pound is looking feisty against a weakened dollar, if you want to find out the best way to get more for your sterling feel free to get in touch with myself and my colleagues at www.currencysolutions.com for a free currency quote or alternatively, give us a call on 0207 740 0000.

Have a great week.

Nigel.