The pound slipped this morning, snapping a five-day winning streak against the euro as traders dumped sterling ahead of this weeks Bank of England meeting. Meanwhile, the dollar and the yen fell against the euro and higher-yielding currencies as solid Chinese data and expectations of a rate hike in Australia buoyed sentiment towards the perceived riskier currencies.

Pound Sterling – UK Markets

Exchange rates for the pound remain relatively low against its major currency partners, although this morning sterling is on the rise against the US dollar and Asian currencies. The pound is currently valued in the region of 1.64 against the US dollar and just over 1.10 against the euro.

Sterling remains on the back foot after weak GDP figures for the third quarter led to the pound being dumped on the foreign exchange markets. Consumer confidence rose in October to slightly better than expected, coming in at -13, above the expected -14. Today in the UK, PMI figures for the manufacturing sector are due with construction figures out tomorrow.

US Dollar – US Markets

Exchange rates for the US dollar are tapering off against the single currency this morning, currently trading just above 0.67, while also declining against the pound, Aussie and New Zealand currencies.

Overnight US personal consumption figures came in more positive than expected, reflecting the fact that the US economy grew 3.5% in the third quarter. Yet with much of this growth due to the “cash for clunkers” initiative, growth in quarter four could be weaker than expected.

Today in the US, markets will be interested in construction figures for September, which are expected to rise 0.8% on the month, and results of the ISM manufacturing survey.

Euro – European Markets

Currency rates for the euro have gained a further 0.2% against the US dollar in early trading this morning, as economic optimism grows. The euro is currently valued around 0.89 against the pound, while sinking against the Australian and New Zealand dollars.

The euro is benefiting at present from a round of currency diversification, as investors leave the safe haven yen and US dollar.

The euro has gained against the US dollar after the US based CIT Group filed for bankruptcy in the US and today European traders will be interested in the German manufacturing PMI which is expected to rise to 49.6. PMI figures for the eurozone manufacturing sector are also due and this could help the euro to extend gains against its major currency partners.

Other Currencies – Highlights

The Australian dollar has also climbed in Monday's Australian session, rising against 15 of the 16 most actively traded currencies. The RBA meets tomorrow and is expected to raise interest rates by a further 0.25% in a bid to combat inflation. Australia remains one of the few nations to have avoided recession and the AUD is riding a wave of economic confidence at present.

Currency rates for the South African rand dropped to their lowest level since July against the US dollar as demand for the higher yielding currencies fell with the announcement of bankruptcy from US lender, CIT. The rand is vulnerable to risk aversion at present, having rallied over 30% this year against its major currency partners.