Three
key developments to monitor

Last week respective concerns
all around the world plagued the markets, prompting the speculation of numerous
forms of action, .

Starting in the UK, fears that
a strong pound is hindering export growth and evidence of a telling slowdown in
retail sales caused Mervyn King to outline his temptations for further easing.
On the back of this speech the pound slid heavily against its counterparts.

Three
key developments to monitor

Last week respective concerns
all around the world plagued the markets, prompting the speculation of numerous
forms of action, .

Starting in the UK, fears that
a strong pound is hindering export growth and evidence of a telling slowdown in
retail sales caused Mervyn King to outline his temptations for further easing.
On the back of this speech the pound slid heavily against its counterparts.

As the euro zone entered
recession, a revelation that will further harm the UK’s struggling recovery,
the main issue within the region was ensuring Greece didn’t default on its own
maturing bonds. Safely secured for a few more weeks at least, the troubled
nation will once again need to make headway to ensure its continuity past the
New Year.

In America, fiscal cliff
concerns led investors from the UK and euro, into the safety of the
dollar. US Treasury Secretary, Timothy Geithner, claimed progress was made over
the status of America’s budget, but still work remains. Sentiment reflects the
encouraging news as the dollar weakened early this morning, as risk appetite
slightly increased.

This week main currency
movements are likely to be determined by subsequent the developments of these
three issues. Following the notable sterling weakness last week, we could see a
short-lived bout of profit taking, strengthening the pound, before a return to
the familiar downward trend. This may represent a good time to buy dollars.

Key Announcements
Today:

• 15.00pm – USD – Existing Home Sales: expected to slightly increase to 4.76m