World leaders pledged up to $430 billion in support for the International Monetary Fund at a meeting between G20 officials in Washington over the weekend although the news has done little to lift sentiment ahead of another busy week in financial markets. The euro is likely to remain under the spotlight, especially if investors add French political worries to the Spanish budget concerns that are currently at the centre of ’s debt crisis. Sterling, on the other hand, is looking somewhat bullish after hitting fresh five-month and 20-month highs against the US dollar and euro respectively on the back of robust British retail sales data.

The pound traded near six-month highs against the US dollar to go with reaching 20-month peaks against the euro and a currency basket. Economists had pencilled in a 0.5 per cent pick up in sales over the month in March following the previous month’s -0.8 per cent decline that had traders questioning the stability of the economy. However, consumer spending jumped by 1.8 per cent, the biggest rise since January 2011, allowing the pound to bulldoze its way through key technical resistance levels as traders moved quickly to top up their pound balances on the reduced prospect of more Bank of England monetary easing

US dollar

The US dollar struck a broadly weaker tone as it has done for the most part of April on persistent worries growth is slowing following another string of below-par economic data releases last week. Investors widely expect the Federal Reserve to restate its promise to keep borrowing costs near zero until 2014 and, more importantly, leave the door wide open to more dollar-negative quantitative easing

Euro

The euro opens close to a two-week high against the US dollar, a level it had breached on the back of a surprisingly upbeat German sentiment survey that rose to its best reading since July 2011. Political uncertainty in France is expected to weigh on the single currency.

Japanese yen

The yen traded close to April lows against most of its main rivals, including the British pound and US dollar, after a number of dovish remarks from Bank of Japan officials in recent days has led markets to price-in the possibility of more monetary stimulus. As a result, the yen is likely to face additional pressure ahead of the Japanese central bank’s policy announcement.

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