Pound Sterling - UK Markets

Sterling currency rates are mixed this morning with the pound declining against the US dollar and South African rand, while gaining on the euro, yen and Australian dollar as investors position themselves ahead of market announcements.

With little data out on Friday, currency markets digested the Bank of England financial stability report and OECD growth forecasts released last week. With downbeat forecasts for the UK economy and ambivalent comments from Mervyn King, currency gains for the pound were capped, particularly against the US dollar and euro. A CBI survey released this morning has shown the most positive results in two years for the UK financial sector and a Bank of England report has shown mortgage approvals are still rising in the UK. Tomorrow brings publication of first quarter GDP data and sterling currency rates could weaken in the build up to this announcement.

US Dollar - US Markets

The greenback is gaining ground this morning, trading at higher levels against is major currency partners as investors favour the safety of the world's reserve currency in the midst of economic uncertainty. The dollar is currently trading within recent ranges of 0.71 against the euro and 0.60 against the pound.

With little data out in the US late last week and this morning, foreign exchange markets have been digesting news from last week. The FOMC meeting noted that the pace of economic contraction is slowing in the US and while this boosted currency exchange rates internationally, it was tempered by the release of downbeat growth predictions from the OECD. Oil remains in the region of USD70 a barrel, a neutral balance between supply and demand that reflects the uncertain state of the global economy. There is no data out in the US today.

Euro - European Markets

The single currency has lost ground against its major currency partners this morning, trading at 1.40 against the greenback and 0.84 versus the pound in the wake of economic data released in the eurozone. The euro has also gained against the Australian dollar, yen and Swiss franc.

Economic, industrial and consumer confidence have risen across the eurozone with EMU figures released this morning showing an improvement across the board. This suggests the 16 nation eurozone is beginning its slow climb towards economic recovery with new industrial orders and production experiencing a slow pick up in June. Today is light for eurozone data and euro currency rates are likely to be affected by first quarter GDP statistics from the UK later in the week.

Other Currencies - Highlights

The Australian dollar fell against the pound on Friday, ending three consecutive days of gains, as investors digested the week's economic data and decided to opt for safe haven currencies. Weaker than expected first quarter GDP also led the Kiwi dollar lower against sterling, as this led to speculation the RBNZ may have to proceed with interest rate cuts to stimulate the ailing New Zealand economy. Both the Australian and Kiwi currencies have declined against the US dollar as comments from China indicated that the US dollar is likely to remain the foremost reserve for some time, triggering demand for the greenback at the expense of the higher yields. There is no data out for Australia and New Zealand today.