Pound Sterling - UK Markets

The pound has recovered ground against the US dollar this morning, currently trading at the 1.52 as Wall Street gains prompted a slight upturn in risk appetite. The pound has also gained against the euro, Australian, Kiwi and Canadian dollar although it remains confined to familiar ranges against these currency partners.

The Bank of England's quarterly inflation report released yesterday presented a distinctly downbeat view of the UK economy and weighed on sterling throughout the days trading. This morning the trend in sterling remains neutral with Tuesday's inflation data likely to be the next major influence on the pound. The data is expected to show inflation moving towards the government's two percent target. Figures this morning also show growing interest in the UK property market as the Council of Mortgage Lenders announced a 29% increase in mortgage loans in March. With no major announcements in the UK today, sterling exchange rates will likely be affected by GDP figures from the eurozone.

US Dollar - US Markets

The dollar gained ground on the euro this morning as weak German GDP figures undermined confidence in the single currency. Dollar exchange rates are higher across the board this morning, although the dollar has lost ground against the pound, yen and Thai baht.

This morning Chrysler has announced plans to close one quarter, or 3,200, of its car dealerships across the US as the company prepares for bankruptcy. Wall Street shares rose slightly overnight and an upturn in risk appetite allowed the pound and euro to recover some of the ground lost yesterday. The US consumer price index for April is due later in the day.

Euro - European Markets

The euro has slipped in value this morning following the publication of German GDP figures for the first quarter of 2009. The euro lost 0.3% on the US dollar to trade at 1.35 and declined 0.8% against the yen as markets received confirmation of economic contraction in the eurozone.

GDP figures showed the German economy shrunk by 3.8% in the first quarter of 2009, the largest decline on record. The collapse in world trade has been particularly hard on the export-led German which relies heavily on manufacturing and industrial production. GDP in the eurozone contracted by 2.5%, taking the annual rate of decline to -4.6%. These figures are likely to induce some volatility for the euro throughout the day. The EMU trade balance is due next week.

Other Currencies - Highlights

The New Zealand dollar is weaker this morning against its international currency partners after retail sales statistics showed sales fell by a record 2.9% in the first quarter. This is more than double the previous drop of 1.4%. The weak New Zealand economy and uncertain trend in equities is keeping the New Zealand dollar vulnerable at present and this news sent the Kiwi to its first weekly loss since February.

The Japanese yen has strengthened this morning, as uncertain equities and GDP figures in the eurozone support demand for the safe havens. Producer and wholesale prices in Japan continue to decline, falling at their fastest pace in over 20 years as the slump in global trade has lowered commodity prices internationally. GDP figures are due in Japan early next week a -16.1% contraction is expected for the first quarter of 2009.