Pound Sterling - UK Markets

Currency rates for the pound reached a six-month low against the single currency yesterday, although bounced back after UK GDP figures were revised upwards for the second quarter. This morning the pound is higher against its major currency partners, reaching 1.60 against the US dollar and 1.09 against the euro.

The -0.6% contraction recorded in the second quarter was taken as a positive sign by markets yesterday, and the UK is expected to exit recession in the third quarter. The CBI retail sales survey also came in more positive than expected and this news sent sterling exchange rates 1% higher on a trade weighted basis. The housing market is expected to be a key driver of UK recovery and Halifax house prices are due tomorrow.

US Dollar - US Markets

Currency rates for the US dollar are weaker this morning, ahead of US GDP figures released today. The greenback has fallen 0.6% against the euro to 0.68 and is currently trading nearly 1% lower against the pound at 0.62.

US consumer confidence figures advanced by less than expected yesterday, indicating the tone of "guarded confidence" that is dominating international markets at present. US GDP figures are out this afternoon and the economy is expected to contract at an annual pace of -1.2% in the months from April to June. Personal consumption figures and employment change are also due today and this could make for a volatile day of trading internationally.

Euro - European Markets

Currency rates for the euro hit a two-week low against the US dollar yesterday, falling after the Russian central bank slashed interest rates. This morning the single currency is 0.5% higher against the US dollar at 1.46 and 0.2% lower against the pound at 0.91.

The euro declined slightly yesterday after weak consumer confidence figures in the US sparked a rise in risk aversion, and ECB president Trichet commented in favour of a stronger US dollar in currency markets. This morning the German unemployment rate has sunk to 8% in September and Switzerland's leading index has come in more positive than expected. Euro currency rates will likely be affected by US data out today.

Other Currencies - Highlights

Currency rates for the Australian and New Zealand dollars slipped against the pound yesterday, reversing a five day streak of gains following UK GDP figures for the second quarter. This morning the Australian dollar reached a 13-month high against the US dollar after retail sales rose for the first time in three months, adding to speculation of an interest rate rise in future. The Aussie is currently valued at 0.88 against the US dollar.

The Japanese yen has strengthened against the US dollar and euro this morning as risk aversion rises in the market ahead of key US GDP and employment data. Industrial production in Japan rose for the sixth consecutive month with factory output rising 1.8% in August as the economy begins to recover. The Bank of Japan has also raised growth forecasts, as the Japanese economy shows "signs of recovery".