GBP still the runt of the litter.... But we are hopeful

US Dollar:
The greenback finished last week lower against the majors as risk appetite returned as a price driver to the FX market. Friday afternoon saw GBPUSD push back towards the 1.52 level and a break of 1.37 on EU¬RUSD saw the pair run up to 1.3795. With a quiet week for data last week, market participants have put the recent reversal in the dollar down to sentiment and ultimately risk appetite. There is also the feeling that the recent bullish attenuate to the FED funds rate may be overdone. The Fed is widely expected to leave rates un¬changed near zero and make few changes to the key part of its statement: the commitment to leave rates on hold for a while. "With some of the other uncertainties in the world, it might not be a time for dramatic change in wording," said Jonathan E. Lewis, founding principal of Samson Capital Advisors, which has $6.5 billion under management. Calendar this week is a lot chunkier than last week with US trade figures today, FOMC rate set¬ting meeting tomorrow and inflation figures out on Thursday .
DATA— USD Net long term TIC flows (JAN), USD Industrial Production (FEB), Empire Manufacturing (MAR)


Pound:
Sterling was a mixed bag last week beginning and ending the week around 1.52 against the USD with a dip down to 1.4870 during mid week trade and finishing marginally lower against the EUR at 1.1030. The pound has been the black sheep of the currency world over the last month with poor trade balance figures, stall¬ing house prices and the spectre of a hung parliament lucking over Westminster. Looking forward we are hoping for a better week as we have heard from BoE Chief Economist Dale of the weekend who reiterated that most quantitative easing hasn’t filtered through to the economy yet and we have the release of the BoE minutes, employment data and lending figures which will give a good, objective assessment of the economy’s health. Historically the pound has also been a beneficiary of risk appetite and has maintained positive correlation to global equities. Given the recent price changes in the USD and stock market rallies, we could see sterling firm up on the back of this. From a technical stand point cable needs a break above 1.5225 to give the sterling bulls some footing, after that the next significant level is 1.55. On the down side the psychological 1.50 is important and then the yearly low of 1.4872. Against the EUR a move towards 1.1130 opens the door to a big move higher towards the 1.14 but any trade through 1.0950 would open the possibility of a drop to 1.0626.
DATA— UK Rightmove House Prices MoM/YoY (MAR)

Euro:
The Euro finally put the brakes on the march of the US dollar last week, registering its first weekly gain in a month although we attribute this more to Dollar weakness than Euro strength. The pair traded as high as 1.3795 on Friday slipping back slightly to 1.3746 this morning. Unless we get some news that is very euro nega¬tive we expect the pair and indeed the Euro has a whole to remain manipulated by moves in its American coun¬terpart. The calendar this week is relativity busy with a whole host of inflation and employment data as well as further talks regarding the details of a Greek rescue package. Brussels is also considering setting up an EMF, European Monetary Fund to assist in future crisis of this nature.
DATA— EuroZone Employment QoQ/YoY (4Q)


General:
• Lloyds TSB plans to spin off part of its giant commercial property portfolio into a separate company. This should leave the main business free to lend to the UK consumer.

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GBP/USD	1.5097
GBP/EUR	1.0998
EUR/USD	1.3740
GBP/JPY	136.82
GBP/AUD	1.6532
GBP/NZD	2.483
GBP/ZAR	11.2135
GBP/CHF	1.6009
GBP/CAD	1.5365
GBP/SGD	2.1075
GBP/THB	48.88
GBP/HKD	11.7010 red-down; blue-up (snap shot