Pound Sterling - UK Markets

Foreign exchange rates for the pound remained at low levels against the euro yesterday, losing another 0.5% after weak retail sales figures. This morning sterling has remained bearish, trading nearly 1% lower at 1.63 against the US dollar and sinking to 1.11 against the euro.

Negative news concerning toxic assets at Lloyd's bank reduced support for the pound yesterday, while retail sales which showed only a 0.2% rise from last month also put the pound under pressure. The CBI industrial trends survey was downbeat, with only 8% of respondents reporting positive figures. Public sector borrowing has increased to GBP16.1 billion as the government continues to spend its way out of recession. There is no further data in the UK today.

US Dollar - US Markets

Foreign exchange rates for the US dollar have climbed this morning, as risk appetite in the market takes a hit. The US dollar is currently trading higher against its major currency partners with the exception of the Brazilian real, currently valued at 0.68 to the euro and 0.61 to the pound.

US building starts and the Philadelphia Fed surprised markets positively yesterday, rallying in September as the US economy begins to pick up. Manufacturing in the Philadelphia region leapt to 14.1 on the index while building starts improved to 0.60 million. The trend in US equity markets remains bullish, although there are fears this rally could run out of steam as economic recovery is expected to be slow and difficult. There is no further data in the US today.

Euro - European Markets

Euro foreign exchange rates have continued to rally against the pound, rising to 0.89 this morning. The euro also rose against the US dollar yesterday, reaching its highest level since September 2008 touching on 1.47 against the US currency before falling back to 1.46 this morning.

The euro gained ground yesterday on the back of improved jobless claims and manufacturing figures in the US which reduced demand for the dollar as a safe haven. The EMU current account has come in at EUR6.6 billion as the trade surplus has widened recently. The German producer price index rose 0.5% in the last month, falling by -6.9% in the last year. There is nor further data today.

Other Currencies - Highlights

Foreign exchange rates for the Aussie and Kiwi currencies trimmed gains against the pound yesterday, after a slight correction in the market limited risk appetite. The New Zealand currency however, is set for its longest week of gains since 1999 against the US dollar. Australian motor vehicle sales are due on Monday.

The Turkish central bank continues to slash interest rates, reducing the base rate to 7.25% overnight, down from 7.75%. Turkey is one of only 3 G20 countries to continue cutting interest rates, as inflation reaches its lowest level in nearly 40 years. Turkey has suffered a sharp recession due to the withdrawal of foreign investment and the lira weakened against the US dollar in the aftermath of the announcement.