Pound Sterling - UK Markets

The Pound has risen this morning on the back of improved market confidence but remains trading at low levels internationally. Sterling is currently struggling to find support above 1.4 on the Dollar and remains weak against the Euro.

Yesterday the Bank of England declined to provide ‘sector specific support' to the ailing automobile industry and this led the Pound to fall against the Euro. This morning the FSA has announced the introduction of more draconian regulations to prevent risky investments being undertaken by banks. With an absence of major data in the UK, Sterling exchange rates are subject to international risk trends and positive retail sales figures in the US yesterday led Sterling to strengthen against its major currency partners. Next Wednesday brings the UK unemployment rate and this will be a source of volatility for the Pound. There is no data in the UK today.

US Dollar - US Markets

The Dollar has lost ground this morning against its international currency partners as better than expected retail sales figures have boosted market sentiment. The Dollar is down against the Pound, Euro, Canadian, New Zealand and Australian Dollars.

US retail sales showed a 0.7% increase in February, a stronger gain than expected revealing an underlying positive trend in the US economy. This news, in combination with the announcement from Bank of America that they expect to make a profit in 2009, sent equities surging yesterday and redistributed funds resulting in better exchange rates for many of the higher yielding currencies against the US Dollar. Also in the US, Bernie Madoff has been jailed this morning for his $50 billion fraud after pleading guilty to all 11 charges. The US trade balance is released this afternoon.

Euro - European Markets

The Euro is holding strength this morning, gaining on the Yen and US Dollar while also trading at favourable rates against the Pound, Australian and Kiwi Dollars.

Despite the release of negative figures from Germany, the single currency gained on the Pound throughout yesterday's trading. German industrial production fell by -7.5% in January, revising annual rates to -19.3%. This is indicative of the V shaped downturn the Eurozone is experiencing which is affecting Germany's heavily export orientated economy. Germany is the largest economy in the EU and fifth largest in the world by levels of GDP. Economists suggest the decline in consumer confidence and demand could mean economic policy is to play an increasing role in global recovery. In the Eurozone, this could lead to a redistribution of production to some of the EU's smaller economies. EMU retail sales are due today.

Other Currencies - Highlights

Asian equities have surged overnight and the MSCI index held its biggest rally since November as Japan and China both announced a broadening of rescue efforts. Speaking from a press conference in Beijing, Chinese Premier Wen Jiabao defended China's economic policies and announced they expect world growth to return to normal by 2010. The government growth target this year is 8%. In November China announced a 4 trillion yuan (£420 billion) rescue package and international economist suggest years of high growth and a tightly managed budget will support the Chinese economy throughout 2009.

The Japanese Prime Minister has ordered a third government rescue package as the Japanese economy suffers due to the recent strength of the Yen. Japanese consumer confidence and industrial production figures are due today.