Pound Sterling - UK Markets

Sterling foreign exchange rates gained 0.21 cents against the euro yesterday on the back of improved risk appetite while also strengthening against the US dollar. In early trading this morning the pound has made further gains on the US dollar while declining against the euro, yen, Australian and Kiwi currencies.  

Sterling exchange rates are currently in a neutral phase against its currency partners. Yesterday there was a limited rise in risk appetite as German consumer confidence and UK home prices buoyed expectations of recovery. The CBI distributive trades survey released today came in at -15, a rise from the -17 recorded last month. The Bank of England quarterly report showed credit conditions eased in the second quarter while BP profits have halved due to weaker prices and demand for energy. There is no further data in the UK today with consumer credit and mortgage lending due tomorrow. 

US Dollar - US Markets

US foreign exchange rates slid this morning, falling against its major currency partners as risk appetite is revived in the market. The US dollar is currently trading at 0.7005 against the euro and 0.6051 against the pound.

US home sales jumped 11% in June, adding to investor optimism that the property market is bottoming out. This improved risk appetite and dampened demand for the safe havens yesterday, with the US dollar and yen declining at the expense of the pound and euro. US GDP figures released on Friday will be of interest to foreign exchange markets. Economists are predicting a -0.7% contraction with a return to growth in the third quarter. Consumer confidence data in the US is out today. 

Euro - European Markets

Euro foreign exchange rates remain strong this morning, retaining support above 1.4270 against the US dollar and 0.8639 against the pound. The euro has also gained against its Asian currency partners and the Brazilian real.

The euro strengthened yesterday as German consumer confidence rose by more than expected. This led the euro and pound higher on the back of increased market optimism. Also yesterday the Hungarian Central Bank voted to drop interest rates to 8.5%, from 9.5% in the first cut in six months for the bank. The forint gained against the euro on optimism that inflation is easing in Hungary. Today is light for eurozone data with the German consumer price index out tomorrow.

Other Currencies - Highlights

Asian foreign exchange rates experienced a boost overnight after GDP figures showed Asian economies are recovering better than most Western nations. China reported annual growth forecasts of 6-8% while South Korea is expecting 2% growth and Singapore 5%. This is in contrast to growth contractions in the UK and eurozone economies and will likely strengthen Asian foreign exchange rates.

Foreign exchange rates for the Australian dollar improved against the pound yesterday after the RBA governor Glen Stevens noted that the risks to the Australian economy were becoming more balanced as the global financial situation stabilises. The kiwi dollar lost ground to the pound ahead of the RBNZ interest rate decision.