Weekly FX roundup: Greece overshadows Euro, Pound slump continues (page 2 of 2)

Therefore we feel any such bounces on short term optimism will provide shorting opportunities in EURUSD.

Sterling slump continues

Turning to the UK, the Pound hit a ten month low (1.4783) against the US Dollar, before rallying to close its third straight week lower at 1.5137. The Pound came under intense selling pressure early in the week, largely triggered by political fears of a hung parliament in the upcoming UK elections in June. The Pound dropped as much as 2% against the dollar on Monday after a survey showed PM Gordon Brown's Labour Party trimmed the opposition Conservative party's lead to just two points, its narrowest level since October 2007.

The sharp knee-jerk sell off on Monday reflects the doubt the market has regarding the ability of the current ruling party to address the budget deficit in the UK, which at 12% of GDP, reflects deficit levels similar to those seen in Greece. There was little reaction to the Bank of England's rate decision as rates were held at 0.50% and the asset purchase programme remained unchanged at GBP200bn as expected. No details were revealed and the focus will turn to March 17 upon the release of meeting minutes.

And finally, we capped the week with a better than expected Nonfarm Payrolls number from the US which showed a loss of -36k (versus expectations of -68k). The overall unemployment rate went to 9.7% from 9.8%. Risk appetite continued to build on the optimistic jobs news.