Pound Sterling - UK Markets

Currently sitting at around 1.46 versus the US Dollar, Sterling is very weak internationally at present. The CBI has warned of a potential 1.7% economic contraction in 2009 with close to 3 million unemployed by 2010.

George Osborne, the shadow Chancellor, has come under fire for his partisan comments on the value of the Pound, which has dropped more than 30% against the Dollar this year. Osborne claimed he feared a Sterling collapse, as recent events show a rapid depreciation of Sterling against a basket of its major currency partners. Both Brown and Darling have hinted at tax cuts in the short term, citing the “quick and decisive action” needed to prevent further economic slowdown. The UK base rate may reach as low as 1% in a move designed to stimulate housing and export markets.

We can expect further movement of the Pound with the publication of Consumer and Retail Price Indices tomorrow.

US Dollar - US Markets

The US Dollar is retaining strength, supported by risk aversion internationally as the G20 failed to inspire confidence in markets.

The G20 leaders showed consensus in their desire for economic reform and spoke of a strategy to deter banks from high risk lending, hold more liquidity and eliminate the extremities of boom and bust.

Industrial Production figures are due later today from the US.

Euro - European Markets

After declining against the US Dollar in the lead up to the G20, the Euro is enjoying a bullish run on the currency at present, currently sitting at around 1.267.

Despite entering recession, the Euro is retaining strength versus the Pound. The EMU trade balance is due out this morning.

Other Currencies

The Japanese Economy has shrunk 0.4% in quarter 3, making this the first Japanese recession since 2001. This comes after recession in other major economies reduces demand for Japanese good. The next interest rate decision in Japan is on Friday and their base rate currently sits at 0.3%.