Pound Sterling - UK Markets

Sterling has risen 3% against the Yen following the Japanese Central Banks decision to slash borrowing costs to 0.3%. The Pound is also down against the Euro to 1.2712 and declined against most of its major currency partners overnight.

This week is laden with economic data that could induce a range of volatility for Sterling and elsewhere in the markets. Brown and Milliband continue their envoy around the Middle East raising cash for finance, with an estimated £17 million required by Lloyds TSB and HBOS for their merger to be underwritten by the government.

Purchasing Manager Indices for both Manufacturing and Services are due, along with Consumer Confidence Survey which is likely to have an impact on the value of Sterling internationally. 

US Dollar - US Markets

The US Dollar declined slightly versus Sterling overnight, but gained against most of its major currency partners, reaching 1.6156 against the Pound and 1.2741 against the Euro. 

The FTSE closed having gained13% last week, signalling a return to stability following the shocks of late. Markets continue to be driven by negative short term economic data and central bank activity, liquidity injections and rate cuts, a trend likely to continue for the remainder of 2008.

Presidential Elections tomorrow in the US are causing economists to speculate as to the potential of a financial overhaul. A series of soft manufacturing and construction related data are due this week in the US.

Euro - European Markets

The Euro opened with a mixed bag of results this morning, down to 1.2709 against the US Dollar and 1.2741 against the Pound.

Widely reported loss of profits this morning from French bank Societe Generale, Germany's Commerzbank and the UK's HBOS after risky lending and bad debts. Ryan Air profit fell 31% in quarter 2 despite an increase in passengers as peak oil prices reduced profit margins at the airline.

Eastern European economies such as the Ukraine, Hungary and Romania all remain under pressure as stricter lending from banks has frozen many of the foreign denominated loans which fuel development in the emerging economies. The Forint has declined 20% versus the Dollar in the last month alone.

Yet despite the continual stream of negative data, equity markets have been cautiously rising throughout Europe and Asia on the confidence that crisis is ebbing in the financial sector. This week the EMU Purchasing Manager Index for Manufacturing, Produce Price Index, Retail sales and ECB interest rate decision are all due and likely to determine the value of the Euro internationally.