Sterling fell off earlier gains against the euro on Monday as it tracked the euro’s marginal gains against the US dollar. Sterling was looking fragile against the US dollar for much of the day as investors preferred the safe haven of the US currency on concerns over the outlook for the UK recovery. The pound should remain strong against the euro as investors look for an alternative to the euro during the European debt crisis – especially given moves made last week to start cutting interest rates in the region. House prices in the UK showed signs of recovery yesterday and out later today we have manufacturing and industrial production figures so call in now for a live exchange rate.

In the euro zone, European shares and the euro made a slight recovery as news emerged over the weekend that the political turmoil in Greece seems to have been resolved with the announcement that a new ‘government of national unity’ would be formed and the now infamous PM George Papandreou would resign. Elsewhere though, yields on Italian bonds – i.e. the interest rate that the nation needs to pay to borrow – hit record highs yesterday as investors became more and more concerned that the country would fail to implement austerity measures. Today sees a crucial confidence vote for Silvio Berlusconi. Call in now for a live exchange rate.

In the USA, the US dollar continues to benefit from demand for safe haven assets as investors shy away from the perceived ‘riskier currencies’. Out later today there is some economic optimism data which will give an insight into the economic prospects however the mainstay of any US dollar movement is likely to be related to the euro zone.

Elsewhere, Chinese manufacturing figures expanded in October which was a positive sign that the world’s economic powerhouse is not being unduly impacted by the euro zone crisis. Positive data in China is linked to stronger ‘commodity linked’ currency rates so call in to ensure you don’t lose out.



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