POUND
The Pound was up on the Euro this morning but held back by the Dollar after attention focused on Euro zone debt problems after the U.S managed to stave off a default by agreeing on rising their debt ceiling and instigating spending cuts in time for their debt repayment deadline. Better than expected U.K Construction data this morning gave the Pound a further boost, although sustained gains are a less likely prospect with debt concerns in its counterparts’ regions a reason many see for recent sterling strength. “At the 1.15 mark people will be wondering if sterling has come down too far too fast. If you look at sterling`s fundamentals they are still pretty weak,” said Jane Foley, senior currency strategist at Rabobank. “The only reason sterling has picked up ground in recent weeks is because there was a crisis in the euro zone and then in the U.S. too.” So Sterling holds on to its gains on the Euro for now whilst down on the Dollar as the U.S stave off default and allow confidence to creep back in for Dollar buyers. Predicting further market movements even in the short term is proving to be a point of difficulty amongst analysts at present, with U.S and Euro zone debt travails and mixed U.K data affecting trader’s decisions the most at present.

EURO
The Euro was on a downward trend this morning against the Pound and U.S Dollar after focus returned on the region’s debt problems after the U.S managed to deal with theirs to the point of staving off a default. Whilst debt concerns in Washington may not go away, traders were keen to take advantage of the brighter prospects by backing the Dollar this morning. Conversely, attention was heightened over the sovereign debt crisis in the Euro zone and whether the economy was growing at a quick enough pace to support those nations that are still in trouble.

The Euro was held back further against the Pound after U.K Construction PMI data was better than expected, whilst losses were sustained against the U.S Dollar as debt concerns swung from the U.S to the Euro zone after a bill was passed in the U.S House of Representatives to raise the debt limit and avoid default.

Euro zone PPI data was worse than expected this morning which will do little to prevent further losses on the single currency today, although the market remains tentative with a number of factors mainly centred around debt concerns still in play that could see a swing in either direction for the Euro or its main counterparts.

US DOLLAR
The Dollar was given a boost this morning after the U.S House of Representatives passed a bill yesterday that agreed to raise the debt ceiling and put in place spending cuts to reduce the $14.2 trillion bill that is owed. The bill, which is expected to go through the senate successfully on Tuesday, renewed confidence in the greenback allowing it to gain in strength over an ailing Euro and by association Sterling also. With debt concerns switching to the Euro zone, the Dollar was able to make some advances on its main counterparts this morning, although it was held back from further gains on the Pound after U.K construction PMI was better than expected; staving off Pound bears and those with less confidence in the U.K economy, at least in the short term. Even in the event of a downgrade, some analysts believe the Dollar wouldn’t crash overnight, although medium to long term Dollar weakness could be on the cards. “If the U.S. is downgraded, the dollar might sell off at the margins, but there isn’t going to be a slam-dunk, cataclysmic selloff that is suddenly going to make everyone hate the dollar and love the euro,” said David Bloom, London-based global head of currency strategy at HSBC Holdings Plc.

“The problem with currencies is that if you sell one you have to buy another, and there isn’t really an alternative to the dollar. The unfortunate thing about bunds is that they’re issued in euros.”