Overnight, the pound gave up some of its recent gains as European issues returned to front and centre of investors' minds.

Commercial banks held record overnight deposits, with the ECB highlighting a continuing unwillingness to lend to each other, a €5 billion auction of 10-year German Bunds was barely covered and UniCredit, Italy's biggest bank, had to offer shares at a massive 43% discount to get a €7.5 billion capital raising away. These were certainly concerning signs for Europe, and this was reflected with the FTSE, DAX and CAC all weaker between 0.5% and 1.6%. This European equity market weakness contributed to selling of both the euro and the pound. Having ended yesterday's Australian session around the 1.5640 mark, the pound drifted over the course of European and US trade to eventually close at 1.5619.

Upon reopening for Asian trade, the pound has continued to lose momentum to be currently just above 1.56. Tonight's UK services PMI and the US ADP private sector payrolls report serve as the next obvious directional catalysts for the pound.