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Sterling falls again against US Dollar, Euro, Australian Dollar and New Zealand Dollar yesterday

Sterling fell again yesterday against the US Dollar, Euro, Australian Dollar and New Zealand Dollar after more weak UK data. According to the Nationwide building society, house prices fell by 0.9% in August. It is first time since February last year that there has been two consecutive months of falling prices suggesting that recent declines in the housing market might be more than just a seasonal dip.

UK construction sector growth also slowed for the third month in a row in August, to its lowest in half a year at 52.1, exacerbating fears of a "double-dip" recession in the UK.

Against the Australian dollar, Sterling was trading at £/AUD 1.7545 at the end of last week; at the time of writing Sterling is at £/AUD 1.6950 - a fall of nearly 6 cents (3.4%) on the week. The fall is down to impressive Australian GDP growth and a series of poor UK PMI data. On a more positive note, the last time Sterling v Australian dollar was trading at around £/AUD 1.69, 8 days later the rate hit £/AUD 1.81. These fluctuations no doubt being carefully monitored by foreign currency dealers.

There was little reaction yesterday to the European Central Bank's (ECB) decision to keep interest rates at 1%, a decision that was widely expected. The ECB also upped its growth forecast but remained cautious with ECB President Jean-Claude Trichet suggested that recovery would occur "at a moderate pace with uncertainty still prevailing."

The US non-farm payrolls report holds centre stage today ahead of the long, labour-day weekend in the US and is a key barometer for policy expectations prior to the US Federal Open Market Committee meeting on 21st September.

Also today the Eurozone and UK services PMIs are expected to signal a marginally slower pace of services activity growth in August.