Pound Sterling - UK Markets

Sterling foreign exchange rates remain weak this morning, trading lower against the US dollar and euro ahead of GDP figures released this week. The pound is currently trading at 1.59 against a stronger US dollar and 1.08 against the euro.

The pound fell to five-month low against the single currency on Friday, after Mervyn King's comments helped to keep sterling at low levels. Economists are predicting the pound could stay the weakest of the major currencies for some time, as high government debt and rising unemployment put foreign exchange rates under pressure. There is no major data in the UK today with second quarter GDP and money supply figures released tomorrow.

US Dollar - US Markets

Foreign exchange rates for the US dollar are higher this morning, rising to 0.68 against the euro and 0.62 against the pound. The greenback is also higher against its international currency partners, rising against the Canadian dollar, Brazilian real and Australian and New Zealand dollars.

The US dollar has benefitted from a rise in risk aversion recently, after Friday's figures show US durable goods orders fell by 2.4% in August after rising 4.8% in July. The path of US recovery is important for foreign exchange rates throughout the world as it determines the level of currency diversification. At present the euro has been the major beneficiary of increased risk appetite and economists are expecting the G7 nations to follow suit. There is no major data in the US today with consumer confidence figures released tomorrow.

Euro - European Markets

Euro foreign exchange rates are mixed this morning, rising against the pound, Australian and New Zealand dollars while falling against the yen and US dollar. The single currency is currently valued at 1.46 against the US dollar and 1.08 against the euro.

The euro rose against the US dollar this morning, reversing a two-day losing streak after US consumer sentiment improved in September. Consumer prices in three German states have fallen this morning as energy prices continue to decline, with economists predicting a -0.2% drop across the region. The German import price index is due tomorrow, with economic, consumer and industrial confidence released in the eurozone.

Other Currencies - Highlights

Foreign exchange rates for the Australian dollar reached a 24-year high against the pound on Friday, after Mervyn King's comments put sterling under pressure. They were also taken by markets as confirmation that UK interest rates would remain on hold for some time and led investors to seek out the higher yielding Australian currency. Australian retail sales trends and building permit figures are due on Wednesday.

Foreign exchange rates for the Japanese yen rose to an eight-month high against the US dollar overnight, while stocks and commodities fell following the news that global recovery was not strong enough to withdraw stimulus measures. The strong yen led to declining shares for Japanese exporters, as the strength of the nation's currency prompted speculation that export levels would remain low.