Sterling fell, weighed down by concerns about the UK political and financial outlook ahead of this week's budget and a general election that looks set to be closely fought. The dollar boosted to a three-week high against the euro, as a series of events including the interest rate hike in India, and the increased tension between China and the US, as well as hawkish comments from the Federal Reserve's Bullard increased its safe haven flows. The focus in the eurozone remained on the development of the Greece crisis with no concrete bail-out plan; however, ECB's Trichet is confident that a plan will be put in place by the end of the week.

Sterling

Britain's economic situation still looks uncertain despite the strong rebound in growth forecast as cautionary comments made by the Mervyn King dragged sterling down. He claimed that 'even if growth rebounds, the level of activity is still likely to remain weak for a considerable period and it is ultimately the level of activity rather than its growth rate that matters for employment and the degree of inflationary pressure'.

US Dollar

The Dollar remained supported against a basket of currencies as continued increase in safe haven flows continued, after an interest rate hike in India and the continual uncertainty of the Greece bail out plan.

Euro

The euro fell to a three week low against the dollar, as concerns over Greece's fiscal position continued. Confusion over a potential bail-out for Athens heightened after comments from Germany's Angela Merkel claimed that aid for Greece should not be on the agenda at this weeks meeting of EU leaders as Athens had not asked for financial assistance. The ECB's Trichet saved the euro from further losses as he suggested a combined loan from the IMF with bilateral support from EU countries was a possibility as long as stringent conditions were placed on the aid.

Japanese Yen

The Japanese market was closed for a public holiday, so the yen was dictated by other market sentiments and overall saw the currency weaken as investors risk appetite continued to increase.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.