Sterling gained ground yesterday, touching a three-month high against the euro after positive inflation data triggered appetite for the pound. US industrial production figures fell 0.1% in October, leading to a brief bout of risk aversion while the eurozone trade balance has come in better than expected for September. Today, volatility for the pound is likely with the Bank of England minutes released.

Pound Sterling – UK Markets

Sterling exchange rates are mixed this morning, gaining slightly against the US dollar while falling against the yen, Aussie and Kiwi currencies. The pound is currently valued at 1.68 to the US dollar and 1.12 against the euro.

Sterling climbed to a three-month high against the euro yesterday, after positive inflation data helped to boost support for the pound. Rising by 0.2% in October, inflation rates for the UK are better than expected, prompting speculation that the UK could return to growth in the fourth quarter. Today in the UK the Bank of England minutes are due along with the CBI industrial trends survey.

US Dollar – US Markets

The US dollar is weaker this morning, falling slightly against the euro and pound, trading at 0.67 and 0.59 respectively. The greenback is also weaker against the Aussie, Kiwi and Canadian currencies.

The US dollar rebounded overnight following comments from Ben Bernanke, who noted the Fed is “attentive” to changes in the US dollar. The comments on currency helped drive a Wall Street rally, also triggered by weaker than expected industrial production figures, which rose only 0.1% in October. In early trading this morning the US dollar is slightly weaker, as positive UK inflation data have helped trigger a rise in risk appetite.

Euro – European Markets

The euro is broadly stronger this morning, rising to 1.49 against the US dollar and 0.88 against the pound. The single currency has also gained against its major Asian and European currency partners.

The eurozone revealed a EUR6.8 billion trade balance in September, coming in positive after the deficit recorded in August. European share markets fell in early trading from a 13-month high, falling after US industrial production came in weaker than expected. This morning the euro has pared gains however, rising in anticipation of current account figures later in the day which are expected to be positive.

Other Currencies – Highlights

Currency rates for the Aussie and Kiwi dollars have fallen for the second consecutive day as weaker than expected industrial production in the US sapped risk appetite in the market. This month's gains for the Aussie dollar were trimmed to 3.1%. Today the Aussie dollar slipped 0.2% while the Kiwi fell 0.1%. Australian hourly pay rates rose a further 0.7% in the third quarter, with an annual rise of 3.6%.