The pound has consolidated below 1.5000 today after yesterday's sudden falls took it aggressively lower against a basket of currencies.
Opinion polls are focussing on the narrowing gap between Labour and the Conservatives, while the Euro is holding above 1.3450 on hopes of a Greek bailout.

In Athens today there was another strike over possible austerity measures yet we have the market talking about the Germans giving guarantees to a Greek bond auction next week. There is no appetite amongst Germans for any type of guarantee while Greece gives no indication of implementing further austerity measures, and even if they do agree an extra €4.5bn worth, implementing them is a whole different ball game.

It seems highly unlikely that there will be a bail-out of any kind, and once the markets realise this the Euro will fall further. Even if there is Germany can't bail out Spain or Italy and they will be next.

EURUSD - today's spike below 1.3450 was very short-lived but nonetheless is symptomatic of the nervousness permeating the markets. The overall scenario of a lower Euro remains the key drag on any rallies and only a move above 1.3740 would promote a little anxiousness amongst Euro shorts.

GBPUSD - The key level on a daily close remains 1.4850 which is the 61.8% Fibonacci Retracement of the up move from 1.3500 to 1.7045. A break below here would re-target 1.4400, the 22nd April 2009 lows.
The pound now needs a recovery back above 1.5020 to try and stabilise in the first instance, something it has been unable to do so thus far in order to re-target the 1.5270 resistance area.

EURGBP - the November and December 2009 highs at 0.9150 are the key barriers to further Euro upside here. Yesterday's rally stalled at this level and remains the key barrier to further sterling losses. Euro dips should some buyers around 0.8980 and 0.9020.

USDJPY - not much change from this morning on the yen. Risk aversion will continue to favour the yen while below 89.50 and should see a drift back towards 88.25.

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