Pound Sterling - UK Markets

Sterling foreign exchange rates were broadly unchanged yesterday in the absence of UK data, although this morning the pound has spiked against it's major currency partners. Sterling is currently valued at 1.65 against the US dollar, having gained nearly 1% and is trading at 1.14 against the euro.

This morning's data shows UK industrial production rose 0.4% in the month to July, while manufacturing gained 0.9%. Both sectors have contracted around 10% from last year. Industrial production accounts for around 17% of UK GDP and recent survey results indicate an even greater recovery. The BRC has reported retail sales fell 0.1% in August and speculation over the Bank of England decision could see the pound weaken further this week.

US Dollar - US Markets

Foreign exchange rates for the US dollar have plunged this morning, falling against the pound and euro as positive UK figures boost appetite for risk. The US dollar has also declined against its major Asian and European currency partners, currently trading a 0.69 versus the euro and 0.60 versus the pound.

After being closed for a public holiday yesterday US markets have opened in bearish mode this morning with the greenback losing ground on the back of improved risk. Positive figures from the UK and eurozone have weakened foreign exchange rates for the US dollar although these losses could be trimmed in the run up to the Fed's beige book released tomorrow. Consumer credit statistics are due in the US today.

Euro - European Highlights

Euro foreign exchange rates have gained this morning, rising against its major Asian and American currency partners, while falling against the pound, yen, Swiss franc and Australian dollar. The euro is currently trading at 1.44 versus the US dollar and 0.87 versus the pound.

The German trade balance came in at EUR13.9 billion, better than markets were expecting as export levels rose 2.3% in the last month. Also this morning the Swiss unemployment rate came in a seasonally adjusted 4.0%, rising 0.1% from last month. The G7 meeting showed that benchmark interest rates are likely to remain on hold until mid 2010, as the major economies recover from the financial crisis and ECB president Trichet noted yesterday that the eurozone faces a "bumpy" road to recovery. German industrial production figures are out today.

Other Currencies - Highlights

Japan's foreign exchange rates are weaker this morning, falling against its major currency partners on the back of improved risk. The Japanese current account surplus has narrowed, as lower export levels reduced income for the country. Japanese exports are down 37% from last July and the yen is currently trading at 152.42 to the pound and 92.24 to the US dollar.

The South African rand is weaker against the euro and pound this morning, following government concerns over the strength of the currency. Manufacturing in South Africa has fallen 16% on the year and the government is concerned the resurgent rand could undermine South Africa's manufacturing sector. There is no major data due in South Africa today.