The pound cemented gains against the long suffering euro but continued to struggle against a broadly stronger dollar. The euro saw further losses as it emerged that Spanish bank CajaSur had failed over the weekend, precipitating a bailout from Spain's central bank. Across the pond, the dollar benefited from bad news in Europe and remained well supported against most crosses.

Sterling

The pound soared against the ailing euro but struggled against the broadly firmer dollar. The dollar has been supported by risk aversion stemming from the single currency's weakness. The pound was able to claw back losses suffered against the euro last week after the collapse of the Spanish bank CajaSur which stoked further qualms over the state of finances in Spain as well as the eurozone as a whole.

US dollar

The dollar continues to be boosted by the widespread panic across global markets. The dollar again benefited from developments in both the UK and the eurozone to cement further gains. The UK announced austerity measures to the tune of £6 billion while news emerged from Spain that a regional savings bank had failed, both of which combined to give the greenback an early boost.

Euro

The euro capitulated, erasing gains from last week, after the Spanish central bank's takeover of the savings bank CajaSur. The collapse of this bank resulted in a stark warning from the International Monetary Fund. Over the weekend the CajaSur bank was taken over. The bank has 486 branches and their problem loans equated to a figure of €1.5 billion. This marked the second Spanish bank that was in need of a bailout and is expected to be given approximately €523 million. The inference from this is that Spain could follow Greece into needing outside assistance with its finances.

Japanese yen

The yen continued to strengthen and its appeal as a safe haven currency increased due to the rise of geopolitical tensions in Asia. Equity markets were trading lower as news that North Korea had put their military on combat readiness saw increased anxiety among investors.

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