Pound Sterling - UK Markets

Sterling foreign exchange rates are marginally lower against the single currency this morning, while gaining slightly against the US dollar. The pound is also lower against its major Asian and European currency partners, but has strengthened against the Australian, Canadian and New Zealand currencies.

The pound gained ground last week, rising to a one-month high of 1.67 against the US dollar following the Bank of England decision to keep interest rates on hold. The general view at present is that the UK has reached a turning point, with GDP growth expected in the third quarter. Sterling exchange rates remain steady on a trade weighted basis and there is a marginally upward trend against the greenback. This week is packed with UK data which may induce sterling volatility as inflation, labour market, retail and public sector borrowing figures are due.

US Dollar - US Markets

US foreign exchange rates sunk to a one-month low against the pound on Friday after the Bank of England decision to maintain current levels of QE supported market confidence. In early trading this morning the greenback has trimmed losses against the pound and is stronger against its major currency partners, with the exception of the Japanese yen.

US equities gained 2.5% last week as the underlying level of commodity prices continues to rise and strong figures from China supported global demand. This morning the dollar has recovered 0.26% against the euro and 0.83% against the pound ahead of an important week for US data. The producer price index and US retail sales figures are due tomorrow, followed by the consumer price index and current account due on Wednesday.

Euro - European Currencies 

Euro foreign exchange rates are mixed this morning with the single currency trading higher against the pound, Australian and New Zealand currencies, while losing ground against the safe haven yen and US dollar. The euro is currently valued at 1.45 versus the US dollar and 0.87 versus the pound.

While the euro has been supported by positive figures recently, this morning's labour market data shows employment remains the largest challenge to the region, with total employment falling by 0.5% in the second quarter. Year on year employment has fallen -1.8% while industrial production is down -15.9%. On the month however, industrial production rose 0.3% and may strengthen the euro throughout the day. Economic growth forecasts from the EMU and the German ZEW survey are due tomorrow.

Other Currencies - Highlights

Foreign exchange rates for the Australian and New Zealand dollars are weaker this morning against the US dollar, euro and pound as risk aversion rises ahead of important economic data this week. New Zealand retail sales fell 0.5% in July, falling for the second consecutive month and supporting the view that recovery will be a long and slow process. The New Zealand economy is expected to grow just 0.1% in the third quarter and house prices also fell in August after rising in July.

Canadian foreign exchange rates continue to climb this morning, posting their largest five-day gain against the US dollar since August. Rising oil and equity prices have led the Canadian currency higher and last week the Canadian central bank voiced concerns that this could undermine economic recovery. The Canadian dollar is currently trading at 1.0861 per US dollar.