httpvh://www.youtube.com/watch?v=IEL7RBhDR7s

·         Conservative party leads slips again

·         Market continues to worry over UK fiscal position

·         UK retail sales a lot worse than expected

All this and more is available on our blog. Click here  http://www.worldfirst.com/blog

Sterling once again finds itself in the mire on a Monday morning as fears that we will see a ‘hung parliament’ increased over the weekend. The Conservative party have seen their lead slashed from around 14 points to close to 6 in recent months. If you work with a 3% margin of error, it could be extrapolated that if the general election were called today we would be left to hang out to dry.

Friday’s data was never going to help the pound and as we predicted the retail sales figures for the UK were a lot worse than estimates suggested. The release that was published alongside it warned of ‘the negative impact of snow’ and the fact that it was ‘a onetime event’. We’ll see in February’s figures I guess.

Friday’s markets continued to work over the shock rise in the Fed’s discount rate. The dollar moved to a 10 month high against both the euro and pound. We would expect that EUR/USD would drift back towards around 1.30 while cable could now move back to 1.48. Sterling will remain under pressure while economists struggle to agree on what is the best course of action for a post-election Britain.

There is no data of any kind in the G10 sphere today and as such we would expect equity, risk and debt markets to control flows. We would expect to see sterling continue its declines.