Pound Sterling - UK Markets

Currency rates for the pound are around 1.5% lower against the euro and US dollar this week, despite a lack of major economic data. This morning the pound is lower against its major Asian and European currency partners, trading at 1.60 against the US dollar and 1.08 against the euro.

Sterling fell over 1% against the single currency yesterday after comments from Bank of England governor Mervyn King showed that the weak pound was supporting a UK recovery. The pace of economic recovery is also likely to impact upon the level of government borrowing and from this view point, the weak pound is positive. This morning business investment figures show total investment fell by -10.2% in the second quarter of 2009. GDP figures for the third quarter are due out next week.

US Dollar - US Markets

Currency rates for the US dollar are mixed this morning, rising against the pound, rand and Canadian dollar while falling against the euro, yen and Aussie currencies. The greenback is currently trading at 0.62 to the pound and 0.68 to the euro.

The US dollar gained 1.7% against the pound yesterday after Mervyn King's comments put sterling exchange rates under pressure. US home sales figures released yesterday declined from the previous month, dropping 2.7% in August and prompting another bout of risk aversion which allowed the US dollar to extend gains. The G20 summit has concluded by giving a bigger role to emerging economies in the global recovery and today in the US, durable goods orders are due.

Euro - European Markets

Currency rates for the euro are stronger this morning, rising against its major currency partners with the exception of the yen, New Zealand and Australian currencies. The euro is currently trading at 1.46 against the US dollar and 0.91 against the pound.

The euro gained against the US dollar yesterday after the German IFO business climate reached its highest level since September. However the single currency trimmed gains after US home sales came in weaker than expected. This week has been light for eurozone economic data, with the German import price index due this morning. Next week currency rates for the euro are likely to be affected by UK GDP figures and EMU economic and industrial confidence.

Other Currencies - Highlights

Currency rates for the Australian and New Zealand dollars have gained overnight, on the back of pledges from G20 nations to maintain stimulus levels. The G20 is expected to replace the G8 in terms of global economic policy providing a greater role for emerging nations. The Australian and Kiwi currencies both rose over 0.5% against the US dollar, but have trimmed gains this morning after weak trade figures from the New Zealand economy.

GDP in Colombia has contracted for the third consecutive quarter, as the credit crunch slashed export levels and domestic demand. GDP levels fell 0.5% from the first quarter and industrial production has shrunk by 10%. The news sent the Colombian peso lower against its international currency partners.