Pound Sterling - UK Markets

The pound is trading at firmer exchange rates against the US dollar this morning, having risen above 1.51 on the back of better than expected employment data in the US. Against the euro, sterling has weakened to 1.11 as global appetite for higher yields improves. The pound has also sunk to 1.98 on the Aussie dollar and 2.49 on the kiwi.

Sterling is trading near four-month highs against the US dollar as upward momentum continues with the view that the pace of recession is easing. The service sector PMI last week showed a marked improvement in economic sentiment and fuelled sterling strength against the dollar. Despite the improved market sentiment, the outlook for the labour market remains grim with economists predicting unemployment in Britain will rise for the next three years, potentially peaking at four million in 2012. BRC retail sales figures are due today with industrial and manufacturing production due tomorrow. The Bank of England's Quarterly Inflation Report and the ILO unemployment rate could see the trend in sterling remain neutral this week.

US Dollar - US Markets

The dollar has gained against the pound and euro overnight, trading at 0.65 and 0.73 respectively. The dollar has also trimmed losses against its major European currency partners after a rise in risk appetite led to a flow of funds away from the safe havens overnight.

Jobless figures released in the US on Friday show non-farm employers cut 539,000 jobs from the US economy in April, the smallest number since October. This takes the unemployment rate to the highest level in 26 years. However despite the record figure, equities and commodity prices responded well to the data as it supports the view that the pace of recession may be easing in the US. While recovery is not yet underway, economists are predicting we could see a return to growth in the last quarter of 2009. Federal Reserve Chairman Ben Bernanke is due to speak in the US today.

Euro - European Markets

The euro rate has risen to 1.36 against the US dollar and is trading slightly higher against the pound and Australian dollar this morning, consolidating on improved risk. Having also gained on the Swiss franc and Swedish kronor, the euro has declined against the yen and kiwi dollar.

The euro rose 1.7% against the dollar on Friday on the back of US employment figures and positive market reaction to the ECB decision. The ECB voted to cut interest rates to 1% and implement a plan to purchase debt and increase money supply. In contrast to the recent opinion that the ECB is "behind the curve" when it comes to economic policy, these moves placed the ECB in a more positive light and the euro gained ground as a result. There is no major data in the eurozone today with the Germany's consumer price index due tomorrow.

Other Currencies - Highlights

The Australian dollar hit 77 cents against the US dollar overnight as jobless data in the US fuelled demand for the Aussie. Demand for the Australian dollar was also driven higher by firmer commodity prices internationally and an increase in carry trades amidst the view that recession is easing.

The Canadian job market may be showing the green shoots of recovery after it unexpectedly added jobs in April. In combination with news that US employment fell less than expected, the Canadian dollar reached a six-month high against its US counterpart, gaining 2.4% in five days against the greenback. The Canadian unemployment rate is currently 8%. The Canadian Prime Minister has also claimed improving financial and labour market conditions means the economic slump may be nearing an end. New house pricing figures are due in Canada today.