The pound’s outlook remains unchanged, up at record highs versus the under-pressure euro while losing further ground against its safe haven rivals. Sterling is now at October 2010 lows against both the US dollar and yen and may decline further ahead of the Bank of England’s monetary policy decision. The event could easily be overshadowed by the European Central Bank’s meeting though, particularly if policymakers hint at further interest rate cuts. The euro is already at a 16-month low against the US dollar and its decline is expected to develop this week. Germany and France meet in order to progress Europe’s anti-crisis measures although leaders are unlikely to promote any demand for the single currency before a key summit later this month. Robust US unemployment has accelerated the dollar’s already rapid appreciation while risk aversion into the yen continues to be extremely damaging for Japan’s export markets. The popular Australian dollar is down after a disappointing print on the nation’s retail sales. In similar fashion, its New Zealand counterpart is suffering after local trade figures missed forecasts. Emerging European market currencies, such as the Czech Koruna, remain at risk from Hungary’s escalating crisis and need for emergency International Monetary Fund aid.

Sterling

Sterling continues to march higher against its under-fire European counterpart, the euro. However, risk aversion from eurozone credit risks has led to the pound losing further ground against rival safe haven currencies. Sterling begins the week at October 2010 lows against both the yen and US dollar with ongoing geopolitical tensions another reason for traders to seek out the safest of investments.

US dollar

US unemployment data, released on Friday, completely outstripped market forecasts providing yet another sign the US Federal Reserve may not need to inject further monetary stimulus into the economy.

Euro

The euro has fallen to a record 16-month low versus the US dollar ahead of a key meeting between Germany’s Angela Merkel and French President Nicolas Sarkozy. Merkel will be hoping to speed up plans for a eurozone fiscal pact which would result in automatic sanctions for countries that breach deficit targets. However, the single currency’s staggering decline in recent months is further evidence investors see Europe’s disaster worsening before any new anti-crisis measures will be introduced.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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