Pound Sterling - UK Markets

Sterling foreign exchange rates have spiked against the US dollar this morning, rising above 1.69 on the back of positive economic data. The pound has also risen against its international currency partners, trading just below 1.18 against the euro.

The UK service sector PMI has expanded to 53.2, ahead of market expectations in July. Manufacturing production has also expanded by 0.4% adding further evidence to the case that the UK economy is on the road to recovery. This will be good news for the Bank of England who will make a decision regarding interest rates and quantitative easing levels tomorrow.

US Dollar - US Markets

Foreign exchange rates for the US dollar are mixed this morning, trading in choppy ranges against the euro and pound recently as risk appetite fluctuates in the market. This morning the greenback is valued at 0.58 versus the pound and 0.69 versus the euro.

Today is packed with US data that is likely to cause more currency volatility. Employment change, factory orders and ISM manufacturing data are released, to be followed by initial jobless claim figures tomorrow. These will help contribute to economic sentiment in the world's largest economy and are likely to influence global risk appetite. If positive, this could influence the US dollar and yen negatively.

Euro - European Markets

Foreign exchange rates for the euro are also mixed, with the single currency climbing against the Australian and kiwi currencies while losing ground to the pound, yen and US dollar. The euro is currently valued at 1.43 against the US dollar and 0.84 versus the pound.

European retail sales shrunk -0.2% in June, contracting at an annual rate of -2.4%. The European service sector PMI has also noted a modest rise, climbing to 45.7 showing that the 16-nation eurozone could be beginning to climb out of recession. European stocks have climbed this morning in response to the news. An interest rate decision from the ECB is due tomorrow.

Other Currencies - Highlights

Australian foreign exchange rates have dipped from their yearly high as investors hedge risk ahead of unemployment figures released tomorrow. This has led the Australian dollar to reverse some of its gains from speculation that the Reserve Bank will raise interest rates by the end of the year. The New Zealand unemployment rate is also due tomorrow and this could limit appetite for the South Pacific currencies.

The Canadian dollar has weakened overnight, after the Canadian finance minister voiced concerns at the rapid rise of the currency. The CAD has recently appreciated to a 10-month high on the back of rising risk appetite, performing the best of 16 currencies against the US dollar last month. The central bank has noted they will verbally intervene if they believe CAD appreciation will inhibit recovery prospects.