Pound Sterling - UK Markets

Sterling currency rates have declined this morning, trading lower against all its major currency partners with the exception of the Australian, New Zealand dollars and the Swedish Kroner. The pound is currently valued at 1.63 against the US dollar and 1.15 against the euro.

Despite the more positive tone in global markets at present, the trend in sterling remains neutral. Last week the pound sunk against the euro after news that France and Germany have climbed out of recession, combined with downbeat inflation forecasts from that Bank of England heightened fears that the UK is lagging behind. This week brings a number of important statistics for the UK, beginning with consumer and retail price indices out tomorrow.

US Dollar - US Markets

US currency rates are higher this morning, gaining over 1% against the pound to trade at 0.61 and rising 0.6% on the euro to 0.70. The greenback is also higher against its European and Asian currency partners, with the exception of the Japanese yen.

Market sentiment has turned marginally positive in the US, following Friday's industrial production figures which show output rose by 0.5% last month. Though this was largely felt in the automobile sector through the Fed's "cash for clunkers" policy, the 1.9% rise in Canadian factory output also led to a more positive tone across North America. Today is light for US data with the producer price index due tomorrow.

Euro - European Markets

Euro currency rates remain firm this morning as the euro has consolidated on a week of gains against its major currency partners. The euro is currently 0.6% higher against the pound, trading at 0.86, while dipping against the US dollar to 1.41.

The euro was led higher last week following news that France and Germany have emerged from recession, with each nation posting 0.3% growth in the second quarter. Eurozone sentiment has improved with the positive growth figures, leading economists to speculate that a recovery in Eastern Europe could not be far behind. This morning's figures show the European trade surplus has declined in June, falling to EUR1 billion. There is no major data released in the eurozone today.

Other Currencies - Highlights

Currency rates for the Japanese yen have strengthened this morning following news that Japan has also emerged from recession. Japan ended 4 consecutive quarters of contraction with the economy growing at an annual pace of 3.7% in the second quarter. The recovery has been driven by an upturn in exports, after plummeting consumer demand sent the export-reliant Japanese economy into recession last year. While the news is positive, economists are quick to point out that recovery has a long way to go with Japan's unemployment rate currently running at a six-year high of 5.4%.