Sterling still under pressure
Sterling continues to find the going tough on the currency markets. The incoming polls are showing a declining probability of a decisive outcome in the UK general election, making it more difficult for markets and the ratings agencies to gain a sense of clarity and confidence about the post-election trajectory of the public finances. A larger than expected trade deficit didn’t help sterling’s cause either yesterday, with the gap between exports and imports widening to £3.8bn in January – the widest level since August 2008. The result has been further modest losses for sterling against the dollar, which has been a bit firmer generally; GBP/USD is back below the $1.50 level, having traded as low as $1.49 overnight. Eur/Stg remains under upward pressure, and is hovering around the 91p mark as the European session kicks off.
