UK install David Cameron as new Prime minister.

US Dollar:

The US Dollar extend gains as European and US stock index's trade firmly lower yesterday, point¬ing to continued risk aversion that takes shares lower and boosts demand for the safety-linked greenback. De¬spite the massive EuroZone bail out package (1 Trillion USD) aimed at creating confidence in the sovereign bond market, traders continue to sell the riskier assets and flock to the US Dollar. Also supporting the currency is marked improvement in US economic fundamentals. Employment data released last week showed improved job creation and with EuroZone growth crumbling before our eyes trades will be left with no choice but to buy the buck. Data out this week has been quiet, the most notable being Retail Sales for April due out on Friday.
DATA— USD Trade Balance (MAR)

Pound:

Sterling traded higher yesterday afternoon as some clarity finally emerged on the UK political land-scape. The pound jumped a over cent against the Dollar and nearly 2 against the Euro as it became clear that Labour had no chance of forming a coalition which left the door wide open for a Tory/Lib pact. This was made official last night as Gordon Brown drove to Buckingham Palace to formerly give the Queen his resignation. The rest was merely a formality as David Cameron was invited to the Palace to form a new government and then headed to Downing Street for press conference. The markets view this outcome as the best of a bad situation, a hung parliament was not welcome but the current arrangement is far more workable than other scenarios. There is still quite a high chance that Cameron will call another election in the next 12 months and look for an outright majority. In the short term GBP will take direction from the markets view on Coalitions attempt to cut the UK budget deficit.
DATA— UK Employemnt data (APR) BOE Quarterly inflation report

Euro:

European policymakers were hoping its vast rescue package of 750 billion Euros would at least buy in-vestors piece of mind. Yet the sting of the last financial crisis and concern in the group’s ability to raise funds for Greece when the single economy was still the extent of the region’s threat are reason enough to doubt the com¬mitment. It is fair to question whether officials are simply trying to shock the market’s into confidence with the size of the program that has been suggested. A major concern is where would the capital come from. The EU member governments are on the line for 440 billion Euros; and yet every member seems financially strapped and most are supporting deficits that are greater than the Union’s allowable shortfall-to-GDP ratio. Comparisons are being drawn with the Russian default of 1998. A decade ago Russia was walking in the same shoes as Greece is today, striving to restore confidence in government bonds by seeking a huge loan from the Interna¬tional Monetary Fund and other lenders. Then, as now, the debt crisis was roiling global financial markets. And hopes were pinned on a bailout — one that in Russia’s case did not work. A critical estimate for whether Europe can recover from its predicament is growth. Should a recovery prove robust, tax revenue and investor confi¬dence could close the gap. For this reason, the preliminary 1Q GDP numbers due this morning are vital.
DATA – EUR GDP (1Q)

General:

The UK's largest pension defined benefit schemes fell back into the red last month as falling equity markets hit the value of pension assets. Research showed the aggregate deficit of the UK's largest 7,400 schemes swung to a £2.2bn shortfall from a £300m surplus in March – the first since before the financial crisis in June 2008.

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GBP/USD	1.4980
GBP/EUR	1.1825
EUR/USD	1.2666
GBP/JPY	139.25
GBP/AUD	1.6740
GBP/NZD	2.0904
GBP/ZAR	11.2327
GBP/CHF	1.6641
GBP/CAD	1.5250
GBP/SGD	2.0703
GBP/THB	48.14
GBP/HKD	11.6550 red-down; blue-up (snap shot)