The euro and the pound advanced 0.4% apiece against the US dollar after investor confidence rose. Today we await an interest rate decision from the European Central Bank, which could prove to be an anticlimax as updated third-quarter Gross Domestic figures revealed a still-fragile economic recovery.

Pound Sterling – UK Markets

The pound rose 0.3% against the dollar and 0.8% versus the yen this morning after news that the Bank of America repaying taxpayer bailout funds boosted investor confidence. Sterling retreated slightly against the euro and currently trades at 0.905 ahead of a European Central Bank policy decision expected later on. Any hint of a move towards exiting the large amount of stimulus injected into the economy will certainly boost the single currency further ahead of the pound.

US Dollar – US Markets

The dollar fell this morning after the Bank of America said it would repay USD45 billion of taxpayer bailout funds. The Bank of America is expected to repay its Troubled Asset Relief Program funds over the next few days, with observers saying this could be the first in a wave of such payments by major US banks that have yet to return the government bailout money.

Euro – European Markets

The euro rose 0.2%to 90.61 pence, though it was still below the one-month high of 91.54 pence hit on Monday. While the ECB has moved forward on talks about possible exit strategies, the Bank of England has been perceived to be lagging behind other major central banks in terms of its likely timetable for reducing monetary stimulus.

Other Currencies – Highlights

Disappointing economic data from Australia showed that the service sector expanded at a slower pace in October. However, the Australian dollar remained supported, as buoyant stock prices remained the primary driver for the risk-correlated currency. The yen extended its fall as far as 87.89 per dollar having made its largest daily loss (0.9%) versus the greenback in six weeks in the previous session.