Equity markets across the US, UK and Europe have rallied sharply overnight as the G20 pledged to maintain support for the global economy. The UK retail sales monitor in the UK has produced a positive result for the year to October, while French and German GDP figures are due later in the week.

Pound Sterling – UK Markets

Sterling exchange rates are weaker this morning, falling 0.73% and 0.64% against the US dollar and euro respectively. The pound is currently lower against all its major currency partners, trading at USD1.66 and EUR1.11.

The pound dropped overnight as concern over weak US labour market figures caused a rise in risk aversion in the market. This led to speculation that US growth rates might be weaker in the fourth quarter and this has put the pound under pressure this morning. The BRC retail sales monitor has come in at 3.8% in the year to October, while the goods trade balance is also due. 

US Dollar – US Markets

Exchange rates for the greenback are on the rise this morning as equity markets rallied overnight in the US. The US dollar is currently valued at 0.66 against the euro and 0.60 against the pound.

US shares have jumped to a 13-month high after the G20 pledged to maintain support for the global economy. Leaders of the G20 meeting in the US over the weekend have argued to keep interest rates low and economic stimulus measures in place. Negative labour market data released in the US on Friday led to a rise in risk aversion over the weekend sending US dollar and yen exchange rates higher. Continuing jobless claims figures are due later in the week.

Euro – European Markets

Euro exchange rates are relatively unchanged this morning, down slightly against the US dollar and yen while rising against its higher yielding currency partners. The euro is currently trading in the region of 1.49 against the US dollar and 0.89 against the pound.

French and German equity markets rose overnight, along with the Dow Jones and UK FTSE index as G20 leaders pledged support for the global economy. EU finance ministers are due to meet this week, and the French finance minister has warned against “banks on steroids” abusing public funds. This week brings third quarter GDP figures from Germany and France.

Other Currencies – Highlights

The Aussie and Kiwi currencies have fallen from recent highs amid concerns that the currencies have rallied too sharply in the wake of the financial crisis. The Aussie dollar has slid 0.4% against the US dollar while the kiwi fell 0.6% as Australian speculators also claimed that G20 clampdowns could affect the Australian banking industry. New Zealand retail sales and the Australian unemployment rate are due later in the week.