Pound Sterling - UK Markets

Equity markets have rebounded across the world this morning in response to political initiatives designed to stabilise the banking sector. The FTSE gained 8.3% while the Dow Jones and markets across Europe and Asia jumped, reflected in the 2.8% climb of the MSCI this morning, taking the total rise to 13% in just two days.

The British government has announced further measures to underwrite lending and improve liquidity and Sterling has strengthened following the government announcement, gaining 2% on the US Dollar and 1% on the Euro overnight. It is up against all its major currency partners with the exception of the Canadian, Australian and New Zealand Dollars.

The UK September Producer Price Index due this morning and Consumer Price Index due tomorrow morning.

US Dollar - US Markets

American equities have also reacted well to the Federal Reserve's initiatives with the Dow opening 11.1% higher this morning, the largest gain since 1933.

Following the $700 billion rescue package by the US government to buy up the toxic debt of institutions, Paulson looks ready to extend the nationalisation initiative and buy up shares in major banks with potentially a further $250 billion being made available. An announcement is expected this afternoon before American markets are due to open. The US Dollar has weakened overnight, most notably a -7.89 decline against the Australian Dollar.

The World Bank is set to meet in Washington today and the US Producer and Consumer Price Indices are due on Wednesday.

Euro - European Markets

Markets in France and Germany, Austria and Spain jumped this morning as €2 trillion was made available by national governments to prop up failing banks, underwrite lending and provided liquidity to frozen markets. Italy, Sweden, Poland and Norway are also preparing for action as the Eurozone is acting decisively to avoid further financial meltdown. Iceland is suffering on the verge of bankruptcy, holding emergency talks with the IMF this morning.
 
The Euro weakened against the pound but gained against the US Dollar overnight as decisive political action helped investor confidence.