The British Pound falls before the UK's budget announcement tomorrow

Sterling fell broadly on Monday, pressured by the view the UK government will slash its economic forecast and underline the need to use more borrowing when it announces its annual budget later tomorrow, Wednesday. Data showing a halt in asking prices for UK homes and a report from an influential business group that the nation has passed the worst of the recession did little to help the pound, which continued to fall against the Dollar. Jitters ahead of the UK budget has pulled the currency further away from $1.5069 hit last week for the first time since mid-January. Also on Monday, the Confederation of British Industry (CBI) said the recession will ease in the second quarter of this year, although it warned that the recovery will be "slow and fragile" The GBP/USD is currently trading at $1.4546 as of 8:40am, London Time.

The yen briefly hit a one-month high against the euro on Tuesday as renewed concerns about the U.S. banking sector tempered risk appetite and triggered buybacks of the Japanese currency. The yen initially added to the gains it made on Monday when U.S. equities slid after Bank of America reported a jump in non-performing assets, underscoring the banking sector's troubles. "Equities are weak and market players who had bought higher-yielding currencies against the yen earlier amid signs of optimism are dumping their positions," said a trader for a major Japanese bank. The EUR/JPY is currently trading at 126.85 as of 9:00am, London Time.

The euro has been under pressure in the past few sessions, hurt by uncertainty over what policy steps the European Central Bank may adopt next month. ECB President Jean-Claude Trichet signalled on Sunday during a trip to Tokyo that the bank's next move could likely be an interest rate cut of 25 basis points. But Trichet kept mum on details of plans for unconventional policy responses that are due to be unveiled at the ECB's policy meeting on May 7. The EUR/USD is currently trading at $1.2935 as 9:10am, London Time.

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