The pound rose on the news that David Cameron had successfully negotiated a coalition government with his Liberal Democrat counterpart, Nick Clegg. The euro still remains vulnerable to selling as concerns over sovereign debt linger in spite of the $1 trillion financial assistance package announced earlier in the week. The US dollar continues to be the currency of choice despite succumbing to some pressure as the US trade balance for April also gave investors further reason to back the US dollar.

Sterling

The news that David Cameron had become the UK's first Conservative Prime Minister in 13 years gave the pound an overnight boost. The rally continued, as markets reacted positively to the conclusion of protracted negotiations between the Liberal Democrats and Conservative party that saw David Cameron become Prime Minister with Nick Clegg, sealing the post of deputy prime minister. Further support for the pound came in the shape of positive employment numbers.

US Dollar

The US dollar started on the back foot as a brief wave of risk appetite hit markets. However the losses were short lived as Bank of England's Governor, Mervyn King, spoke to the press warning that the UK faced risks to its growth and refused to rule out any further quantitative easing.

Euro

The euro enjoyed a day of mixed fortunes. German and Italian GDP surprised to the upside showing growth of 0.2 and 0.5 per cent respectively, beating market expectations and giving the single currency a boost. French GDP and inflation numbers, on the other hand, disappointed as both failed to live up to forecasts.

Japanese Yen

With a slight increase of confidence in the market, the Japanese yen found itself sold off as traders put money into equity markets and higher risk currencies such as the euro and pound. A report showing that bank lending in Japan fell in April also saw yen positions unwound.