Pound Sterling - UK Markets

Currency exchange rates for the pound have climbed to 1.64 against the US dollar, still inside last week's trading ranges. Sterling has also gained 0.55% on the yen while sliding against the euro, Australian and New Zealand dollars on the back of improved appetite for risk.

Sterling exchange rates declined on Friday against the US dollar and euro after GDP figures came in much weaker than expected. Despite this, equity markets continued to gain and economists are predicting a return to growth in the third quarter. Chancellor Alistair Darling is to meet with banking bosses today amid concerns that banks are charging too much for loans to small businesses. This is despite interest rates being at record lows and a revival of lending being essential to economic recovery. Nationwide house prices are due in a day that is otherwise light for UK data.

US Dollar - US Markets

US dollar currency exchange rates have declined this morning against its major currency partners, falling against the euro, pound, Canadian, Aussie and Kiwi dollars. The dollar rose last week on the back of risk aversion but this morning is trading at lower levels as investors recover limited appetite for risk.

Friday's figures showed US home sales have bounced back 7.5% in the last three months and equities continued their rally, closing the week at their highest level since November 2008. Further corporate earnings data out this week is expected to be positive, though this may have less of an effect on markets as a trend has now been established. Bernanke and Geithner's testimony last week contained little news for markets, as they reiterated the Fed's commitment to loose monetary policy while the situation remains unstable. New home sales and another speech from Ben Bernanke are out in the US today.

Euro - European Markets

Euro currency exchange rates have climbed this morning, gaining 0.38% to 1.4255 against the US dollar and 0.8658 against the pound. The euro has also strengthened against its Asian currency partners, only losing ground to the Australian, Swedish and Norwegian currencies.

The euro has remained in a tight range against the US dollar recently, supported above 1.42 against the greenback. This morning's figures show Ryanair has announced a EUR136.5 million profit between April and June, largely due to the declining cost of fuel. Germany's import price index has also risen 0.4% on the month. While the UK is expected to return to growth in the third quarter, eurozone GDP is expected to stay negative until mid 2010 although last week's manufacturing and service sector PMIs show the pace of contraction is slowing substantially. The M3 is released by the ECB this afternoon and this is regarded as a key indicator of inflation and therefore currency exchange rates.

Other Currencies - Highlights

South African inflation figures are expected to show inflation falling for the fourth consecutive month, as record low interest rates and a stronger rand cool the price of goods. The inflation figures are due on July 29th and these could provide an insight into monetary policy as they will provide scope for the central bank to keep interest rates at record lows. Currency exchange rates for the rand have gained 21% on the US dollar so far this year and this is helping to limit producer costs. There are concerns however, that a strong rand could undermine export prices and hinder economic recovery.

Currency exchange rates for the Australian and New Zealand dollars have advanced on the back of Asian equity rises and healthy corporate earning figures in the US. The Australian currency has gained 0.5% against the US dollar, rising to 82.13 cents. Gains for the New Zealand dollar were more muted, rising 0.3% against the US dollar after Reserve Bank governor Allan Bollard reiterated concerns about NZD strength and stated interest rates are likely to remain low for some time.