The markets don’t seem to have been affected by last night’s final TV debate amongst the three main political party leaders.  If anyone was unclear of what the parties stood for, they’ll know exactly what their policies are now and as they say in politics, there’s clear blue water.  The Lib Dem surge seems to have come to an end and they’ve made it abundantly clear that their position is to the left of Labour, Gordon Brown is reluctant to take the tough decisions on spending now and the Tories continue to sing the Obama mantra of change.  Lots of election point-scoring from all three leaders, but at least now most people should have made up their mind and the election next week will still be fiercely contested.

Volatility has picked up across most asset classes, as markets had a little bounce yesterday, but investors still fear that it might have been of the dead cat variety.  This morning the FTSE is just lower, but still above the 5600 level.  Banking stocks are down in early trade, with Barclays leading them lower, despite some rather good numbers, so the move can only really be put down to profit-taking.  BP too is suffering again after yesterday’s huge decline, as investors continue to fret over their oil leaks.

On the economic data front, US GDP numbers will be the highlight of the day and they are due to confirm that the US economy has returned to decent health.  Recently retails sales and consumer confidence update figures have surprised, meaning businesses are restocking fast.  The GDP numbers should reflect this and be strong, although there maybe a cap on the number from weaker construction activity.

After then there’s Chicago PMI, followed swiftly by University of Michigan confidence numbers, both of which are expected to improve.

Cable took on a bit of a bear squeeze yesterday, bashing back the sellers as investors began to come to terms with the likeliness of a hung parliament in the UK and that such a result would probably not hinder any action taken to deal with the budget deficit.  Last night’s debate hasn’t done much for the market, so this morning we’re trading around 1.5360.  Resistance is seen at 1.5425 and support around 1.5265.  Any administration following the election, no matter what shape, size or colour it is, will have to deal with the deficit and slash spending.  The last thing an incoming government will want stamped on its CV is a downgrade to our credit rating.  The market sentiment is slightly shifting back in favour of sterling and for the time being it looks quite well supported.

Less can be said of the euro, which still looks vulnerable, but it benefited from some strong German unemployment data.  With EUR/USD trading at 1.3290 this morning, levels to watch are 1.3300 to the upside and 1.3175 below.

Gold had its fair share of ups and downs yesterday, although within a tight trading range.  With little news flow regarding sovereign debt issues, the little move higher recently just seems to have run out of steam.  At 1172 resistance is around 1177.5 and near-term support 1164.5 and the bulls will still have their eye on the 1200 level.

Oil has been in the news a lot over the last couple of days, but for the wrong reasons.  Concerns that supply lines in the Gulf of Mexico will be affected by the staggering oil leak at one of BP’s wells fuelled the buying for crude.  Prices also surged yesterday, with the help of Germany’s employment numbers and back above $85 a barrel, the bulls have got the recent highs around $87 in their sights.  The GDP numbers will be focused on closely by oil traders, with any surprise to the upside possibly leading to a test of the highs – all this despite huge stockpiles of the stuff!