Water Proof Cycle Clothing

Unfortunately, waterproof means that sweat can't get out either. Water-resistant and breathable seems to be about the best compromise available, unless you want to spring for a velomobile.

 

There are waterproof/breathable option aswell, with either coatings or porous membranes that allow water vapour through but block liquid transfer(ie Goretex, Entrant...etc) These products will allow some level of breathability, but you will still generate condensation on the inside during very high output activities.

Depending on the duration of your ride, the level of exertion, and the weather conditions a waterproof/breathable option may suit your needs. I find I wear "soft shell" (meaning its only water resistant but more breathable) clothing if it is not raining too hard, and it keeps me dry enough as long as I keep generating enough heat. On the other hand, if its a total downpour I wear "hard shell" waterproof/breathables which keep all the water out but I get a little sweaty if I work too hard. If you're not working too hard, a totally waterproof but not breathable jacket or pants will be significantly cheaper.

Some companies have fused the two options so you can find a jacket that is completely waterproof(/breathable) in the shoulders, arms and chest, while being water resistant and much more breathable in the underarms and back. These garments perform the best all round.

Last year I used these pants MEC Cyclone Tights (Men's) - Mountain Equipment Co-op. Free Shipping Available
and this top MEC Ferrata 2 Hoodie (Men's) - Mountain Equipment Co-op. Free Shipping Available
with a fleece layer underneath both. On really wet days, I put on a goretex jacket instead of the soft shell.

 

Colorado Cyclist is having a closeout on a Garneau Wind Chill jacket. I've not used one, but $40 seems like a pretty good deal.

Louis Garneau Wind Chill Jacket

 

I would wear that around town. That's a good looking jacket.