Please see our latest foreign exchange rate forecasts here. The euro dollar exchange rate is 0.676% lower with 1 EUR = 1.4410 USD at 12 PM in London. The euro pound exchange rate is 0.158% lower with 1 EUR = 0.8827 GBP. "The fragility of the global recovery will remain a key focus for this week. Although equity markets are likely to continue their recent push higher as they bounce back from oversold levels, there is little scope for short-term interest rates to move higher and thus FX markets may struggle to find a theme," says a currency note from RBS. The August US ISM manufacturing and Payrolls will be closely watched as they will play a key role in shaping the course of policy and indicating what chance there is of new measures being announced at the September two-day FOMC meeting (20th and 21st). "We are cautiously risk positive this week as investors return from their summer holidays and will have cash to put to work. Despite GBP having made gains in recent weeks on the back of safe haven support, a lack of yield is likely to dominate and weigh on GBP for now," say RBS commenting on the British Pound Sterling. Meanwhile, political discontent in Germany over the implementation of further measures to tackle the Euro-zone debt crisis appears to be rising. Continued softening in Euro-zone data and inflation will also keep up pressure on short-term rates.

Source