Sterling struggles to make gains against the struggling Euro

Last week saw the US Federal Reserve keep interest rates frozen at 0.0%-0.25% last Tuesday and confirmed their commitment to further quantitative easing. The news helped to buoy markets until Eurozone contagion concerns tempered optimism later in the week as credit ratings agency Moody's put Spain's credit rating under review on Wednesday and downgraded Ireland's rating by five notches on Friday.

The Euro-Finance meeting ended on Friday with Luxembourg prime minister Jean-Claude Juncker describing "a light, small treaty change that allows member states to create a permanent crisis mechanism". Given that the German delegation had revealed such a decision on Wednesday, investors found it difficult to become excited about the breakthrough, especially after Mr Juncker told an interviewer that "everyone knows that what was decided won't keep through January and more decisions have to be taken".

Whilst there was no major attack on the Euro, investors were not buying Euros, rather they were walking away from them.  Over a period of about four hours in the middle of Friday the Euro fell against everything before consolidating at lower levels. Compared with Friday's starting point it opens in London this morning more than a cent down on the US Dollar and half a cent lower against Sterling.

Sterling might have done better had it not been for a stark reminder that the British economy's fortunes are closely aligned with those of the Eurozone. State-owned LloydsTSB/HBOS announced it was setting aside an extra £4.3 billion in provisions for its Irish loan portfolio.

That news, together with the earlier deterioration in consumer confidence, held Sterling back on the day. It was steady against the Canadian Dollar and the South African rand but only against the Euro and the Swiss Franc was it able to move ahead. With the Euro out of favour it was left to the US Dollar and the Japanese Yen to make the running.

On Monday Eurozone current account figures and consumer confidence is released while in the US we'll see if the November Chicago fed activity index on Monday will match the positive data from New York last week, while Wednesday brings third-quarter GDP figures from both the UK and the US.