Sterling gained against the US dollar yesterday, but failed to break beyond $1.64/£1 as selling from sovereign investors hampered its efforts, undermined by concerns about the UK recovery. Figures showed that asking prices for residential property fell this month from a year earlier for the first time since September 2009 dropping by 3.4% in London, underlining the patchy recovery despite stubbornly high inflation. Investors expect the Bank of England to keep interest rates at record lows into 2013, with a growing feeling that we may see another round of quantitative easing before too long. Out today we have inflation figures so call in now for a live exchange rate.

In the euro zone, the euro gained to a 3 week high against the US dollar, strengthening as investors expected a positive outcome to today’s meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel to discuss the debt crisis. These gains are likely to be capped by persistent worries over the region’s banking sector and a perceived risk to France’s credit rating. In addition, the euro was helped by large gains against the Swiss franc on speculation that the Swiss currency would be pegged against the euro in an attempt to weaken the Swiss franc and help Swiss exporters. GDP figures are released today so call in now for a live exchange rate.

In the USA, stock markets rose following a three-week drop for the S&P 500 Index on improved risk appetite, but data showing foreigners were net sellers of all US assets in June for a second straight month and poor manufacturing figures weighed on dollar sentiment. In addition, Vice President Joe Biden is expected to discuss China’s currency valuation on his upcoming trip to the country. The Chinese yuan is kept artificially cheap and has damaged US manufacturing as producers are priced out by cheaper Chinese manufacturing.

Elsewhere, the Swiss franc dropped to two-week lows against the euro and dollar on Monday on speculation the Swiss National Bank could further act to curb strength in the currency by setting an exchange-rate target as early as this week. The South African rand strengthened against the US dollar for a fourth day as commodity prices rose on optimism the global recovery is intact, supporting demand for higher-yielding assets. Call in now for a live rate.

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