Pound Sterling - UK Markets

Sterling currency rates have trimmed gains yesterday's this morning, declining against all its major currency partners following the downward revision of growth forecasts from the IMF. The pound has lost over 1% against the yen and 0.76% against the US dollar, trading at 152.64 and 1.63 respectively.

An IMF report published this morning has predicted a long slow recovery for the UK, with GDP expected to contract by 4.9% in 2009. Next year growth is expected to rise by 0.2%, in contrast to government predictions of 1.3% growth. While recent stress testing of UK banks revealed enough resilience to withstand the recession, a "double dip" recession or particularly drawn out recovery could put this stability in jeopardy. Today sterling currency rates will take direction from US markets as there is no data released in the UK.

US Dollar - US Markets

US currency rates are stronger this morning against all but the Japanese yen and South Korean won. The greenback is currently trading at 0.70 versus the euro and 0.61 against the pound, having reversed yesterday's losses and gained on both the currencies.

Major US equities advanced around 1% yesterday, driven by corporate earning figures, taking this week's gains to around 7%. The dollar declined in this wave of optimism, losing over a cent against the pound and euro but has recovered this morning against its major currency partners. This morning Google has announced an 18% profit rise this quarter, with profits of USD1.48 billion in the three months to June. Today housing starts are due in the US and this could show some evidence of greater stabilization in the housing sector. 

Euro - European Markets

Currency rates for the euro are treading a rocky road between 1.39 and 1.41 against the US dollar, finding the greatest support when appetite for risk is high. The euro is currently valued at 0.86 versus the pound and 131.96 versus the yen.

This morning construction output figures in the eurozone revealed a -2.7% decline on the month with an annual contraction of -9.6%. European equities have gained ground this week, with the German DAX climbing for the fifth straight day driven by corporate earnings in America. Figures this morning also show the euro area recorded a trade surplus of a seasonally adjusted EUR1.9 billion in May as imports contracted more than exports 16 nation eurozone. Today is light for euro data with currency rates likely to be driven by sentiment in the US.

Other Currencies - Highlights

The economic rebound in China is paving the way for economic recovery elsewhere, as continued Chinese growth boosts trade and export levels in global markets. At present China is the world's third largest economy and growth is expected to continue at a rate of 8.1% this year. Government spending accounts for a large proportion of this expansion and the Chinese government has recently allocated 4 trillion yuan to a financial rescue package.

The consumer price index and core inflation figures are due in Canada today and this will likely affect Canadian currency rates. Canadian stocks advanced for four consecutive days this week on the back of improved earnings in the US.