POUND
The Pound was down against the Dollar this morning after a U.K Rightmove House Prices report showed a decline in July. The Pound still remained above the 1.60 level however, and advanced on an ailing Euro as fears were raised that E.U ministers wouldn’t be able to contain the growing Euro zone debt crisis in a summit later this week. European bank stress tests last week also highlighted debt problems in the region, allowing the Pound to extend its gains on the Euro this morning. Traders are currently of the view that U.K assets are a safer bet than European ones, giving the Pound a boost even as U.K house prices are down. The positive run of Sterling on the single currency is likely to continue even in the face of poor U.K data as debt concerns in the Euro zone continue to dominate the market. “We think the European banking stress test is unlikely to provide much in terms of assurance to the markets,” said Dirk Hoffmann-Becking, an analyst at Sanford C. Bernstein in a note to clients today. “The concerns about contagion of the sovereign debt crisis into core Europe have taken centre stage.”

EURO
The Euro was down again across the board this morning, extending losses against the Pound and U.S Dollar after confidence continues to diminish in the single currency following European bank stress tests that did little to alleviate investors’ concerns over debt contagion in the region. All eyes will now be on talk of a second bailout for Greece in an emergency meeting between E.U leaders on Thursday. “A decision on another Greek package seems no nearer,” Adrian Schmidt, a currency strategist at Lloyds Banking Group Plc in London, wrote in an investor report today. “The risks are for more weakness in peripheral bond markets and the euro being needed to concentrate politicians’ minds and force a decision.” The Euro is likely to remain on the back foot whilst no clear solution is offered on the ongoing debt crisis. “There’s a lot of fear and uncertainty,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “Against this backdrop, safe-haven currencies are likely to be bought”. These safe havens include the U.S Dollar, but the Pound could also benefit as traders look away from the single currency to protect their profits.

US DOLLAR
The Dollar took back some of its losses late last week on the Pound after a U.K house price survey released early this morning showed a decline in the prices of U.K homes in July. Gains against the Euro were extended further after confidence in the single currency was knocked again following an unimpressive result of European bank stress tests on Friday. The U.S retains some debt concerns of its own, with a deadline of August 2nd in which Washington must pay its bills fast approaching. “EURUSD continues to trade well above its last year`s low. It seems that market sentiment has turned decisively USD-negative on the back of recent economic underperformance and political brinkmanship with regard to the U.S. fiscal issues,” said Citi in a note. So there is still room for a U.S negative story in the short to medium term, but for now traders’ lack of confidence in the Euro is dominating market movement as few investors are prepared to back the single currency at present with Euro negative sentiment at its peak.