Sterling has started the week above $1.64/£1 against the US dollar after weak US data last week and the ongoing deadlock over the US debt ceiling continued over the weekend. Whilst it appears that a deal has now been struck in the USA, the deal still needs to be approved by the Senate. Whilst the pound has benefited from being the ‘best of a bad bunch’ of late due to the UK’s tough austerity measures, weak economic figures mean that the Bank of England is unlikely to touch interest rates for some time. Without the prospect of higher returns, investors are likely to shy away from sterling which could see it remain weak for some time. The Bank of England meets later this week – given the Bank’s recent form, it is almost a given that there will be no changes made to monetary policy. Call in now for a live exchange rate.

In the euro zone, the European debt crisis is still a major concern for investors but some of the focus has been elsewhere following the ongoing impasse in the USA. Friday saw credit rating agency Moody’s threaten to slash Spain’s credit rating and Spain’s Prime Minister called early elections. The crisis in the region is of far more concern over the long term than the US debt ceiling issues and out today we have a wide variety of Purchasing Manager surveys that should paint an interesting picture of business sentiment across Europe post-Greek bailout. Call in now for a live exchange rate.

In the USA, the big news of the morning is that an agreement had been reached in the 11th hour to raise the US debt ceiling and avoid a default. The plan is yet to be agreed by the Senate, but contains 3 key stages. Firstly, it would see $400bn added to the ceiling with a further $500bn added later this year pending a vote of approval. A further increase of $1.5trn would also be put to a vote. Notably, the deal includes spending cuts totalling $2.4trn, but no tax rises. It is not known whether rating agencies will see this as going far enough to address the debt mountain and as a result a downgrade could still be on the cards.

Elsewhere, the Swiss franc and gold continue to surge forward as investors look to safe haven assets. In addition, silver has been incredibly volatile of late as another precious metal safe haven investment. Call in now for a live exchange rate.

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