Political uncertainty caps sterling's gains against euro

The pound finished up 0.35 cents (0.31%) against the euro on Friday, closing the day at 1.1437.

• In early trading on Friday, the pound weakened against the euro as the UK’s political situation became increasingly fragile. The uncertainty surrounding Prime Minister Gordon Brown’s future and his cabinet reshuffle weighed on the pound early on.
  
• However, strong equity markets drove sterling higher on Friday afternoon. The FTSE 100 eventually finished the day up 51.62 (1.18%).
  
• In trading so far today, the pound has started well down against the euro as Prime Minister Gordon Brown faces renewed pressure to quit following disastrous European election results. The local currency rarely benefits from political uncertainty.
  
• There are no major announcements due in the UK or eurozone today.

US dollar claws back losses from pound's sharp rally

The pound weakened considerably against the US dollar on Friday, falling 1.96 cents (1.21%) to finish the day at $1.5978.

• In early trading on Friday, sterling weakened against the dollar as the uncertainty surrounding the UK’s political situation intensified.
  
• Better-than-expected US employment data further extended the pound’s falls on Friday afternoon, despite the overall jobless rate rising to 9.4%. Government data showed the US shed 345k jobs in May, well below the 540k expected by economists.
  
• In trading so far today, the pound has continued its slide against the greenback as speculation surrounding the future of Prime Minister Gordon Brown resurfaced. Last night, Labour endured a drubbing in the European elections after it attracted just 16% of the national vote.
  
• There are no major announcements due in the UK or US today.

US employment data benefits USD vs. EUR

The euro weakened by 2.15 cents (1.52%) against the US dollar on Friday, closing the day at $1.3967.

• In trading on Friday, the euro weakened against the dollar as official government employment data showed the US shed 345k jobs in May. This was much better than the 540k expected, although it did result in the unemployment rising to 9.4%.
  
• Economists said the fact that the greenback strengthened after the jobs data, rather than fall as risk aversion fell and investors abandoned the US currency in search of yield, meant the tide could be turning in its favour. There was also an element of profit-taking as traders capitalised on the euro’s sharp rally earlier in the week.
  
• In trading so far today, the euro has resumed its slide against the dollar as investors continue to digest last night’s European election results.
  
• There are no major announcements due in the US or eurozone today.

UK political uncertainty benefits aussie

The aussie strengthened against sterling on Friday as political uncertainty in the UK weighed on the pound.

• The uncertainty surrounding the UK’s political situation weighed on sterling on Friday, as Prime Minister Gordon Brown came under increasing pressure to resign following several ministerial resignations.
  
• A 0.9% gain in Australian shares on Friday also drove the aussie’s gains after rival miners Rio Tinto and BHP Billiton announced a new joint venture.

Kiwi finishes down vs. GBP

The kiwi dollar weakened slightly against sterling on Friday as the UK’s political turmoil capped its gains after strong rises on equity markets.

• Several high-profile resignations and the uncertainty surrounding Prime Minister Gordon Brown’s cabinet reshuffle weighed on sterling on Friday as speculation he may resign caused investor jitters.
  
• However, gains on European equity markets capped sterling’s losses late on, eventually finishing the day only slightly down.