The pound is stronger this morning against the euro and US dollar, rising on the back of strong industrial production figures out last week. US employment has reached above 10%, with payrolls shedding 190,000 workers in the last month. Today German industrial production figures are due and this could lead to some euro strength.

Pound Sterling – UK Markets

Sterling exchange rates are firm this morning, gaining 0.55% against the US dollar overnight and also strengthening slightly against the euro. The pound is currently valued in the region of 1.67 and 1.12 against the US dollar and euro respectively.

The MPC decision not to expand QE last week led to a boost for the pound, and industrial production statistics due on Friday also led to a 1.6% rise over the month of September. While RBS reports that this reflects the seasonal nature of August statistics, manufacturing figures also suggest an upturn in stock building levels. Today in the UK there is little data, with the BRC retail index out tomorrow.

US Dollar – US Markets

US dollar exchange rates dipped this morning against its major currency partners, falling to 0.67 against the euro and 0.60 against the pound.

The Dow Jones rose by the most in since July this month, as industrial production figures and productivity soared in the US in the third quarter. Average hourly earnings rose by 0.3% on the month to reach an annual rate of 2.4% while the unemployment rate continues to grow, reaching 10.2%. This is up from 9.8% the previous month, and is expected to remain a drag on the US economy. There is no data of note in the US today.

Euro – European Markets

Euro exchange rates rose this morning, gaining 0.5% against the US dollar and 0.8% on the yen. The euro is however, trading lower against the higher yielding currencies, falling against the Aussie, Kiwi and pound.

Last week's figures brought the news that retail sales fell in the eurozone by 0.7% in September, while the ECB indicated that they would gradually look to tighten economic policy. The strength of the German economy at present is helping to fuel the rise in the euro and this could undermine Trichet's attempts to slow the record rally in the single currency this year. Today more data is due from the German economy including industrial production and trade balance figures.

Other Currencies – Highlights

The Brazilian real is weaker this morning after US unemployment figures last Friday led to concerns that this could hinder demand in Brazil's major export market. The Bovespa index took its first fall in four days, trimming weekly gains to 4.8% after US payrolls fell by 190,000 last month.

The Japanese trade balance is due today and this could lead to currency volatility for the yen.