Pound Declines On Polls, Volatile Week Ahead

The pound is sharply lower after another raft of weekend opinion polls showed an improved showing from the Lib Dems.

Despite assertions from David Cameron and Gordon Brown over the weekend that the leadership fight is a two horse race (which it probably is), an improved performance by Nick Clegg increases the chance of a hung parliament.

Although the leaders of the main two parties might really believe that it is a two horse race, they both seemed to go out of their way in Thursday night's televised debate to attempt to get Clegg onside, just in case. Maybe what you might call a two and a half horse race.

Another unsettling factor today is the news that Goldman Sachs are facing fraud charges in the US, and are also under scrutiny in the UK and Germany.

It could be another volatile week ahead for sterling, with an assortment of data due out over the coming days.

The minutes of the April meeting of the Bank of England’s Monetary Policy Committee are due this week, but it seems highly unlikely that they will throw up any surprises in the run up to an election.

Likely to be of more significance are inflation figures tomorrow, unemployment data on Wednesday and government borrowing & retail sales figures on Thursday. After that on Friday we have the first estimate of the first quarter gross domestic product figures.