Pound Sterling - UK Markets

Sterling foreign exchange rates trimmed losses against the euro yesterday after the Bank of England voted to leave interest rates on hold at 0.5%. This morning the pound has climbed to 1.66 against the US dollar and is trading higher against its major currency partners, currently valued at 1.14 against the euro. 

The MPC decision to maintain current levels of quantitative easing saw the pound gain ground on the euro yesterday, climbing 0.5% as confidence in the economy improved. This indicates the MPC view of the economy has not deteriorated, and with industrial and manufacturing figures rising earlier in the week, the outlook for the UK is more positive. This morning the producer price index input figures are at 2.2% for August, while output is at 0.2%. With no further data in the UK today, sterling is likely to remain firm against the euro and US dollar.

US Dollar - US Markets

Foreign exchange rates for the US dollar are weaker this morning, falling against its major Asian and European currency partners with the exception of the Australian dollar, South African rand and Canadian loonie. The greenback is currently valued at 0.68 versus the euro and 0.59 versus the pound.

US jobless claims figures came in better than expected yesterday, as the economy shed 550,000 jobs in the week to September 5, 26,000 less than the previous week. The number of people collecting unemployment insurance has also fallen, to the lowest level since April. The Fed's beige book released earlier in the week also showed the pace of decline is slowing in the US economy and this has helped boost the higher yielding currencies this week. Today in the US the consumer sentiment index is due along with the monthly budget statement.

Euro - European Markets

Euro foreign exchange rates are slightly higher this morning, trading around 1.45 against the US dollar and 1.57 against the Canadian dollar. The euro dipped against the pound yesterday and is currently valued at 0.87.

The German wholesale price index released this morning shows an 8.3% rise in the year to August, indicating a return to positive economic activity. The euro has been supported by rising risk appetite this week following strong economic indicators from the Chinese economy. Today is light for European data with unemployment figures and industrial production for the EMU due early next week.

Other Currencies - Highlights

Figures from the Chinese economy this week has confirmed that economic recovery is on track, with industrial production, trade, consumer price figures and loan approvals for August all posting healthy results. This has fuelled risk appetite in the market, particularly after July's disappointing figures allowing the euro, Australian dollar and South African rand to advance on the back of rising risk appetite.

The Bank of Canada voted to leave interest rates on hold yesterday at 0.25% in line with market expectations, although the central bank has highlighted concerns that the stronger Canadian dollar has slowed the pace of economic recovery. The Canadian dollar has gained 13% on the US dollar this year, making exports more expensive and the currency is tipped to make further gains as economic recovery proceeds. Foreign exchange rates for the Canadian dollar are currently at 1.07 to the US dollar.