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Lots of positives in the global markets this morning and for sterling. Firstly we have seen the Nationwide House price index survey show a surprise bounce as the average house price rose 1.2% in May- this is the strongest monthly gain for 19 months. Although this is a good indicator that the severe downturn in the property market may be bottoming out- Nationwide noted that it is still too early to call as unemployment is still rising and credit conditions remain tight. Sterling was also buoyed by UK consumer confidence matching its highest level in 11 months reported market researcher GfK NOP…the CBI also reported that business sentiment rose to the highest level since 2007. Sterling is now pushing towards 1.61 against the dollar (a new 2009 high) and 155.00 against the Yen- we could see new yearly highs very soon on the EUR and for sterling on a trade weighted basis.

In the wider markets we have seen more leveraging into Oil and Gold which both rose sharply- Gold is closing in on $1,000/oz again and Oil has hit a new 6 month high above $65 a barrel. Commodity prices have leaped this month as a move out of the dollar and Yen mirrors the improved confidence and a move from safety to investments. We have seen major gains in commodity based currencies particularly against the USD- with the CAD, AUD and NZD all making gains this month.

This morning we also saw German retail sales rise unexpectedly in April by 0.5%- a hopeful sign for the German economy to curb the sharp contraction in recent GDP data witnessed in the Q1. This has helped the euro gain against the dollar back over 1.40 and also to remain firm against sterling for now under 1.15. Eurozone CPI inflation came in at 0.0%- the lowest on record- it seems concerns on deflation are not weighing on the euro.

For today again we will be largely US focused- the revised 1st Qtr US GDP figure market expects a small upward revision, it will still leave the annual drop at an alarming 5.4%. Should prove Dollar negative.

Discuss on this on the Currency Exchange Forum