UK hung Parliament is very real possibility.

US Dollar:

Trading in the Dollar was generally firm across the board yesterday as it benefited from risk aver-sion plays by the institutions. Tremors on the financial market have included the fall out from Iceland ash cloud and ensuing travel disruptions and of course the news that Goldman Sachs, the worlds most profitable invest¬ment bank is being charged with fraud by American regulators, and both UK and German authorities have be¬gun investigations. Cable suffered a monumental fall from Fridays high to an intraday low of 1.5195 yesterday afternoon before recovering the 1.53 level although we see the main driver for this being GBP weakness. EU¬RUSD tracked a similar path but with less volatility as the Euro remains under pressure on low growth and sov¬ereign debt concerns. From a technical stand point, GBPUSD’s failed attempt to hold over 1.55 does not negate a move higher but we would hope to see a break above this level over the coming days if the pair is to trade higher. Short term support is coming in at 1.5130 and move under this would expose the psychologically impor¬tant 1.50.
DATA API Oil/Gas Inventories (APR)

Pound:

Sterling had a terrible start to the week shedding over 3 cents against the dollar from Fridays close and losing a cent against the Euro. The drop was fuelled by the surprise surge in popularity of the Liberal De-mocrats leader Nick Clegg following last weeks televised leaders debate. It is widely agreed that the Lib Dems can not gain enough seats for an outright victory so any advance on their position can only damage the Tories, bringing us back to ground zero—a hung Parliament. The Pound did proceed to recover some of its losses dur¬ing afternoon trade, gaining a footing above 1.53 and testing the 1,14 level against the EUR following Right¬move house price data showing a 2.6% spike in prices in April, the fastest pace of growth for 3 years. As prop¬erty is the single largest asset for the majority of the population, any sustained recovery in the market is good news for the UK and a key part of the country’s return to prosperity. A whole raft of inflation data due today should give Sterling Traders their fix for the week.
DATA CPI MoM/YoY (MAR), RPI MoM/YoY (MAR)

Euro:

The Euro extended the decline from the previous week, with the exchange rate falling to a low of 1.3420 with further weakness as policy makers hold a cautious outlook for the region. The Bundesbank said Germany’s economy probably contracted during the first quarter in its monthly bulletin, but expects the recovery to gather momentum in the second quarter as growth prospects improve. Meanwhile, the International Monetary Fund and the European Union are scheduled to meet in Athens this week in order to discuss the terms of the EUR 45B bailout for Greece, and the ongoing turmoil around the region will be prolonged due to the travel chaos grip¬ping the area in addition to this the German finance minister has warned that failure to stop a Greek default will trigger a Lehman's Style financial meltdown as sovereign bond investors run for the hills and freeze money mar¬kets instantly. On the data front, construction outputs in the Euro-Zone fell 3.3% in February after contracting a revised 0.9% in the previous month to post the biggest decline since January 20007. Further bad news for Mr Trichet and his colleagues at the ECB.
DATA – GER ZEW survey (APR) EUR Current Account (FEB)

General:

Travel Chaos continues to freeze the airspace over Europe with UK airports remaining closed until at least 1PM today. The lock out is costing airlines and travel operators millions of pounds will also affect business as meeting and deals are delayed or cancelled.

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GBP/USD	1.5368
GBP/EUR	1.1405
EUR/USD	1.3462
GBP/JPY	142.62
GBP/AUD	1.6515
GBP/NZD	2.1565
GBP/ZAR	11.3784
GBP/CHF	1.6350
GBP/CAD	1.5523
GBP/SGD	2.1121
GBP/THB	49.22
GBP/HKD	11.9125 red-down; blue-up (snap shot)