Pound Sterling - UK Markets

Sterling has sunk lower against the US Dollar, trading around 1.47 ahead of UK trade data released today. The general trend in Sterling is negative at the moment as some economists are predicting we are in the trough of the economic cycle. Against the Euro, the Pound is back down near the record low of 1.14 and has also declined against most of its international currency partners.

Yesterday the British Retailers Consortium announced retail sales had fallen by 0.4% in November, on top of 0.1% in October. This is the first consecutive contraction in 13 years and the Producer Price Inflation index fell from 6.8% to 5.1%. In the UK home sales are continuing to slump, as job uncertainty restricts the purchases of big ticket items and this morning Sony has announced plans to cut back 8000 jobs following weaker sales and the recent strength of the Yen. UK trade statistics are due today and are capping the value of Sterling. While the low Pound is usually good news for exporters, the downturn in global markets means trade balance figures are likely to bring bad news for Sterling. Industrial production data is due tomorrow and expectation over this could keep the Pound under pressure throughout the day.

US Dollar - US Markets

The US Dollar has appreciated this morning as equity markets gain confidence following the announcement of government rescue packages and expected interest rate cuts next week. The Dollar gained against the European and Asian currencies with the exception of the Yen this morning.

Congress is currently negotiating a bail out of the ‘big three' car manufacturers, GM, Chrysler and Ford, as recession has left the US automobile association on the brink of collapse. This has strengthened stock markets and the Dollar has benefited while market focus remains on UK and Eurozone data this morning. Pending home sales are due in the US today and the week is light for US data until Friday when markets will be interested in retail sales and producer price index figures.

Euro - European Markets

The Euro has declined against the US Dollar this morning, down 0.5% but gained on the Pound as weak UK trade statistics have anchored Sterling at low levels. French and German trade data released this morning show widening deficits and shrinking export markets as recession makes its mark on the Eurozone. This is the third time in a row that figures have been at an all time low for France. Swiss unemployment has also risen to 2.7% up from 2.5%. There is no further data out in the Eurozone today.