The pound remained under pressure throughout the day yesterday after the unemployment rate came in at 7.8% and dovish comments from Bank of England Governor King led to speculation that there could be more QE in future. US markets remain strong with the euro and Aussie dollars being two of the primary beneficiaries form currency diversification.

Pound Sterling – UK Markets

Sterling foreign exchange rates have dipped again this morning, falling against the yen, US dollar and euro. The pound is currently trading at 1.65 against the US dollar and 1.10 against the euro.

News that the UK trade balance widened in October and the unemployment rate rose to 7.8% put sterling under pressure throughout the day yesterday, as did the news that Governor King is keeping the door open for more stimulus measures if necessary. The Bank of England Governor is weighing the odds of reigning in stimulus measures with the chance of pushing the economy back into recession if insufficient support is provided. UK inflation rates are predicted to remain well below the 2% target throughout 2010.

US Dollar – US Markets

Currency rates for the US dollar are relatively unchanged, falling slightly against the yen, euro and Aussie and Kiwi currencies while rising against the pound and Israeli shekel. The greenback is currently trading in the region of 0.66 to the euro and 0.60 to the pound.

The US dollar remains buoyant at the moment as equity markets have rallied on the back of Chinese growth and news that the G20 will continue to pledge support for economic stimulus measures. US foreclosures continue to rise however, as does the unemployment rate yet members of the Fed have commented that they support a strong US dollar. Jobless claims figures are due in the US today.

Euro – European Markets

Euro exchange rates are slightly firmer this morning against the greenback and pound, trading at 1.40 and 0.90 respectively. The single currency is weaker against the Aussie and Kiwi dollars.

The euro extended gains against the pound yesterday after the UK unemployment came in at 7.8% and dovish comments from Governor King. Euro currency rates remain strong as diversification against the US and yen occurs, with the euro pushing to recent ranges of 1.50 against the greenback and finding support at 0.90 against the pound. Today the ECB monthly report is due, as well as industrial production figures for the region.

Other Currencies - Highlights

The Aussie dollar received a boost after a surprise rise in Australian jobs led to speculation of another interest rate rise in December. The Australian economy added 24,500 jobs in the last month and this sent the AUD to a 15-month high of 0.93 US cents. The employment rate in Australia is expected to peak at just under 6%.