Sterling is getting a boost, as the latest polls give the Tories a bit more hope and Nick ‘the saint’ Clegg indicates a possible Conservative coalition. As the Lib Dem policies are generally to the left of the Labour party these days, this ‘new revelation’ may require quite a hefty pinch of salt and is probably more geared at enticing Tory voters who fear that a vote for him is a vote for Gordon … but, for the moment, the Pound is riding high. Of course politicians will do almost anything to get into power but, given that whoever gets into office this time round is going to have to be an almost perpetual scrooge, it might be worth leaving the next parliament to someone else! Traders would be wise to ignore news such as this (apart from its immediate impact or course).

Indices have burst higher, taking the FTSE back up to the high 5700’s once again. On the basis that there was not much bad news out over the weekend (over Europeland et al) it is understandable that dealers will be looking towards the uplands, rather than focussing any efforts on naysayers. There is some resistance at 5795/5800 and then above here at the 5820/25 level, but it must be said that the support levels appear the stronger influence at the moment, with every rejection of lower prices forcing rapid recoveries. The major support is now, once again, the 5735/45 region, but early action would indicate little expectation that this will come into play in the early session.

US markets continue to rally strongly with the Dow now above 11200 and the S&P, confirming the break of 1200 to stand at a new 18-month high of 1219. It would be foolish to stand in the way of the raging bull at this point.

On the currencies, the Pound (as mentioned) has had a good weekend and has rallied all the way up to 1.5500 versus the dollar, but is now slipping a bit from the peak as dealers take a second look. The Euro has also solidified a bit after the weakness of mid/late last week and traders seem less confident in setting up shorts. Resistance can be seen just above current levels at 1.3395 all the way to 1.3430, and there is minor support at 1.3340/45. Bears will be hoping for a more successful retest of the 1.5255/70 support, as the break on Friday failed spectacularly. The woes over the Southern European states are unlikely to just disappear and this story is very likely to run and run. Unfortunately, the only countries with any money are the Northern States and they must fear a rolling demand for funds going into the middle-distance. This is not a recipe for either a strong union or a strong currency and there must be a significant risk of extremist parties gaining influence in Germany, Austria, France and Netherlands if aid for the South impacts lives in the North.

Gold went walkabout on Friday, first falling to 1134 and then going ballistic all the way back up to 1160. There is still the strong resistance at 1160/62 and this will probably come into play in the near-term, as it was the failure to close above here through mid-April that helped the drop back to the 1122/24 support. As mentioned last week, the bulls do still have the overall long-term momentum though and the medium-term trend from 2008 has held very well on the two tests so far this year. This line is currently at 1111 and rising. For short-term traders, selling at these levels from 1157/1160 is proving popular in early action with stops above 1162.

Oil is causing some concerns as it returns to the higher levels in light action. The attempt to break back under 82 bucks failed last week and the reaction can be seen in the current price of 85.37. With the economies of the world slowly climbing out of the mire demand is hardly likely to decrease in the short-to-medium-term, even though new technology is making every gallon of the black stuff go further and further. It would appear that ever more of the cash wealth of the world will divert to the Middle East, South America and the commodity-producing nations. Support remains at 82/83 and resistance at 87 (a wide band, but oil has proved well capable of trading this). The real interest remains the Brent/Nymex spread (crack spread) with clients selling Brent and buying the US crude. The spread continues to widen this morning and is now at 225 cents in favour of Brent. As mentioned last week, the two buck difference has generally proved too much to breach in the past, but on this occasion we are seeing heavy positioning from more than the usual suspects. If this is being mirrored across the financial landscape, there may well be a squeeze about to take place. Do not be surprised if there is a sudden widening.