Pound Sterling - UK Markets

Exchange rates for the pound are broadly unchanged this morning after the publication of key UK data. The pound is higher against its European currency partners, trading at 1.08 against the euro, while falling against the US, Australian and Kiwi currencies. The pound is currently valued at 1.58 against the greenback.

GDP figures for the second quarter came in this morning at -0.6%, with the economy contracting at an annual rate of -5.5%. While the move is positive, growth is slightly less than markets were expecting and this highlights the fragile nature of recovery in the UK. Also this morning money supply figures for August rose by 0.1% on the month and 12.5% on the year. The CBI industrial trends survey is due later in the day with the UK service index out tomorrow.

US Dollar - US Markets

US exchange rates are stronger this morning, rising against the euro, pound and yen after UK GDP figures came in weaker than expected. The US dollar has gained 0.16% on the euro, rising to 0.68 and is trading slightly higher against the pound, at 0.63.

The US dollar rose to a four-month high against the pound yesterday after bearish sentiment in the UK helped to push sterling exchange rates lower. Today in the US consumer confidence figures are due, along with housing statistics and key labour market figures later in the week. Economists are predicting house prices will decline at a slower pace as confidence in recovery grows. US GDP figures for the second quarter are also due this week.

Euro - European Markets

Euro exchange rates are slightly lower this morning, weakening against the US dollar and pound as well as Asian currency partners after a downbeat speech from ECB president Trichet. The euro is currently valued at 1.45 against the US dollar and 0.92 against the pound.

Support for the euro fell slightly yesterday after ECB president Trichet highlighted the gradual pace of economic recovery in the eurozone. The governing board of the ECB also deemed it too soon to implement an exit strategy and this dented market confidence in the euro yesterday, sending it slightly lower against the pound and US dollar. This morning, economic, consumer and industrial confidence for the eurozone has come in positive for September and this could give euro exchange rates a boost in today's trading.

Other Currencies - Highlights

Exchange rates for the Australian dollar rose this morning after the budget deficit came in less than expected. The AUD27.1 billion deficit beat market expectations after record low interest rates and government handouts to consumers helped to boost spending and prevent the economy from sinking into recession. The Australian dollar is currently valued at USD0.87 and GBP0.54.

The Brazilian central bank has taken the first step towards tightening lending, as the bank claims credit conditions are beginning to return to normal after the global financial crisis. GDP in Brazil expanded 1.9% in the second quarter due to strong domestic demand and commodity exports. The Brazilian real is currently trading at USD0.55.