It is another fairly quiet day for the foreign exchange markets on the economic calendar with the key releases in the UK being mortgage lending and mortgage approvals The Pound Dollar exchange rate is 0.496% lower with 1 GBP = 1.5033 USD at 10 AM in London. The Pound Euro exchange rate is 0.271% higher with 1 GBP = 1.2329 EUR. The Euro Pound exchange rate is 0.765% lower with 1 EUR = 1.2193 USD. "Having touched €1.23, the pound is continuing to edge higher against the Euro in forex trading this morning. It is another fairly quiet day on the economic calendar with the key releases in the UK being mortgage lending and mortgage approvals," says Caxton FX in their morning foreign exchange market report. The British Pound reached a 19-month high against the euro yesterday on speculation that eurozone debt problems would leave the region fiscally weaker than the UK. After a quiet morning, pound exchange rates began to gain traction as focus returned to the funding problems of certain European countries. Financial markets will closely watch debt auctions by France and Spain later this week following a tepid response to Italy's sale of €7 billion worth of government bonds yesterday. European banks are also due to repay €442 billion to the ECB on Thursday, raising questions about liquidity and putting pressure on the single currency. The pound received a further boost, extending gains after Bank of England policymaker Andrew Sentance said that the drastic tax hikes and spending cuts outlined in the new coalition government's budget last week would not remove the need to start raising interest rates. British Pound vs the US Dollar Caxton FX say: "A present the price has dropped back near $1.50 and a definitive breach of this level is needed for the rally to continue. "Looking ahead, the next major announcement for this pair, and indeed the currency markets as a whole will be US non-farm payrolls due on Friday, which should add more clarity on the state of the US economy." The British Pound continued to rally against the US dollar yesterday, moving to a seven-week high just above $1.51 though the price has dropped back below that level this morning. The pound gained support following further bullish comments from BoE member A. Sentance, who voted in favour of an interest rate rise this month. He said that the fiscal plans were much as expected and did not change his view that it was time to start gradually withdrawing the stimulus measures in place. Although at present he is only a sole voice within the Monetary Policy Committee in calling for rates to be raised, it marks a more bullish stance than seen from either the ECB or Fed, which has been positive for the UK currency. "Sterling's gains have been capped today though as some investors are wary of taking the pound too high, reckoning that the UK currency's rally on the back of last week's drastic emergency budget may have gone too far," says Caxton FX.

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