Pound Sterling - UK Markets

Sterling foreign exchange rates are marginally higher against the US dollar this morning, also rising against the Brazilian real and Mexican peso, while falling against the euro, Australian and Canadian dollars. The pound is currently valued at 1.62 to the greenback and 1.10 to the pound.

The pound has continued to fall against the euro overnight, reaching a five-month low after the Bank of England warned foreign investors may be discouraged from buying UK assets. Concern over the health of Lloyds bank also kept sterling bearish yesterday. There is no major data in the UK today although markets will be interested in the MPC minutes out tomorrow.

US Dollar - US Markets

Foreign exchange rates for the US dollar have weakened this morning, falling 0.75% against the euro to trade at 0.67 and 0.44% against the pound to trade at 0.61.

The greenback strengthened over the pound yesterday, as weakness in the UK economy and interest rate announcements later in the week led investors to adopt safe haven positions. US leading indicators released yesterday were positive, rising 0.6% on the basis of a pending global recovery. This week, the G20 summit in the US is expected to call for "balance" in the global economy, while an interest rate decision from the Fed is also due.

Euro - European Markets

Foreign exchange rates for the euro are stronger this morning, climbing sharply against the US dollar to 1.47 and gaining 0.15% on the pound to 0.90. The euro has also gained on its major currency partners with the exception of the Australian, New Zealand and Canadian dollars.

Speculation that the Federal Reserve will confirm the nascent recovery in the US sent euro exchange rates higher yesterday, as the single currency gained from market confidence. This morning the euro remains buoyant, despite the Swiss trade balance coming in at CHF1.79 billion, worse than markets were expecting. German PMIs are released tomorrow, along with European new industrial orders.

Other Currencies - Highlights

Foreign exchange rates for the New Zealand dollar are stronger this morning, after current account figures for the second quarter showed the deficit narrowed to NZD0.6 billion. New Zealand's biggest dairy exporter Fonterra also raised its forecasts, and this helped fuel a rise in the kiwi this morning.

South African inflation has fallen to 6.4%, the lowest level in 29 months as recession has curbed prices in the region. The central bank's target zone for inflation is between 3-6% and it is expected to reach this within the year. This news strengthened the rand further, after a 27% rise for the currency this year and the rand is currently trading at 7.42 per US dollar.