Sterling nears high against euro

Sterling edged up this morning, closing in on a six-week high against the euro, which itself managed to recover slightly against the dollar as the market caught its breath ahead of key US gross domestic product data. The figures are expected to show a return to growth in the third quarter, which could signal that the US is on the way out of recession.

Pound Sterling - UK markets

The pound rose to a near six-week high against the euro earlier this morning and is currently trading at GDP/EUR 1.11. UK currency benefited as the euro fought to stem its expansive slide this week, as traders took a slump in global stock markets as a sign to unload the single European currency.

Sterling was up 0.3% against the US dollar at 1.64, shifting further away from a one-week low of 1.62 hit on Monday.

Given last week's dismal GDP data, mounting speculation suggests that the central bank may extend quantitative easing in November, keeping the pound under pressure.

US Dollar - US Markets

The dollar was trading against the pound at USD/GBP 0.610 this morning and 0.678 versus the euro ahead of GDP data releases later today. The data is tipped to show that the US economy expanded by 3% between July and September.

These figures are expected to reveal that the world's largest economy has turned a corner, but US data this week has raised questions about a sustained recovery, as consumer confidence dipped to recessionary levels and new home sales fell unexpectedly.

Euro – European Markets

The euro entered a fourth straight day of losses against sterling to trade at EUR/GBP 0.89, pulling further away from 92.40 pence early in the week in the aftermath of the UK GDP data.

The single currency has however edged up a modest 0.2% against the dollar to USD1.474 and was up 0.3% versus the yen at 133.69, recovering from earlier lows.

Sentiment was helped slightly by a small rebound on stock markets, with European shares up 0.3%.

Other Currencies - Highlights

The yen rose across the board this morning, extending gains on the Australian and New Zealand dollars as investors took profits on a host of popular growth-linked trades, it currently trades against the US dollar at 0.011.

Perceived higher-risk currencies, which have recently come under pressure, have rebounded. The Australian dollar was up 0.5% against US currency at USD0.902.

The New Zealand dollar is trading at USD0.719, and was sold after the Reserve Bank of New Zealand dropped its easing bias, facing down market pressure for a rate rise as soon as early 2010.