The pound to euro exchange rate is 0.032 lower with 1 GBP = 1.1422 EUR. The pound to dollar exchange rate is 0.124% higher with 1 GBP = 1.6117 USD. The pound to Australian dollar exchange rate is 0.084% lower on the day with 1 GBP = 1.5249 AUD. This morning the FTSE 100 has moved higher alongside other European bourses - investors are indicating that yesterday's sell-off may have been overextended. The euro and Australian dollar's are therefore in favour; however the British Pound has made gains against the US dollar which had made gains yesterday as markets fell. Nevertheless, there are chances that the pound dollar exchanger rate could yet head lower. In a currency note released this morning UBS say: "Sell-off through 1.6069 has exposed initial support at 1.6006, a move below which would open 1.5906. Near-term resistance is at 1.6261." On the fundamental front the British Pound remains exposed to a weak UK economy. The UK services sector (which represents 70% of the UK economy) remained in expansionist territory in August but the sharp slowdown suggests that July’s strong showing was somewhat misleading; the UK’s economic downtrend remains very much intact. This week’s MPC meeting will surely give plenty of air time to further quantitative easing, but for this month at least, policymakers are likely to remain in wait-and-see mode. Nonetheless, the market had more pressing concerns in the form of a sharp decline in European equities (FTSE was down 3.0%), stoked by fears of collapse in the European banking system. Sterling had the better of it then, and the same may well be true today; this pair is trading at €1.14 for now.

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