Pound Sterling - UK Markets

Sterling remains strong relative to the US Dollar at present, largely in a reflection of the unease afflicting US equities and currency markets. Trading at 1.2636 versus the Euro and 1.8548 versus the US Dollar this morning, Sterling is relatively unchanged and holding a steady position. 

It is likely Sterling's value will continue to be determined by international markets in a light week for data and in reflection of the current uneasy credit environment.  

The British Bankers Association revealed yesterday mortgage approvals are down for August, to less than half the number of approvals for August 2007. Net mortgage lending has also decreased from £4.3 Billion in July to £2.1 Billion in August illustrating effects of the credit crunch on household budgets. 

US Dollar - US Markets

Goldman Sachs won the backing of Warren Buffet yesterday, the second richest man in America, prompting the banks share price to rise 11% overnight. Goldman Sachs is offloading assets in an attempt to survive the low ebb of the credit cycle and Buffet has purchased $5 billion worth of stock with a 10% dividend in the bank.

The US Dollar enjoyed a slight resurgence yesterday after Paulson and Bernanke announced their intention to shore up American banks and stimulate credit markets in the Federal rescue package. The Dollar still remains unsteady and further volatility can be expected as details and costs to the taxpayer of the plan are announced. Bernanke is to testify to the Senate Banking Committee at 2pm today.

House prices in the US have declined 0.6% in July, following a 0.3% decline in June. Further home sales and new mortgage application data is released today.

Euro - European Markets

The Euro rallied above 1.48 overnight against the US Dollar, its highest level in 3 weeks. Back down to 1.4676 this morning, the Euro is enjoying a resurgence in much the same way as the Pound is, profiting from US unease, despite weak economic data. 

Latest data released shows the EU current account deficit for July has narrowed to 1.7B from, 6.1B in June and that the German Business Climate Index has deteriorated to 92.9 in September from 94.8 in August.

The European Monetary Union current account figures are due today.