Daily Currency Report

Overview

The cable was in the spotlight as it indicates that the US dollar has been supported by inflation numbers. The sterling was under pressure after the minutes from BoE showed that some policy makers believe the UK needs to raise rates. The Japanese policy makers will meet today, and it is widely expected they will raise rates for the first time in five years.

GBP
The sterling reached a one-year high against the dollar and a three-and-a-half-month high versus the euro after BoE minutes increased pressure for a UK rate hike. Some economists believe that the poor inflation data could suggest that rates may not rise as soon as expected.

USD
The CPI for the US came in at 0.6 per cent and the Fed chairman indicated that there could be risks for inflation, which resulted in investors raising bets on a June rate hike.

EUR
The ECB's silence towards the euro's nine per cent rise against the dollar could be strategy for further gains. Eurozone CPI rose to 2.4 per cent in April up by 0.2 per cent from the previous month and industrial production for the eurozone rose by 0.4 per cent.

JPY
The yen gained against the dollar, based on speculation that the economy is strong enough to cope with higher interest rates. Japanese policy makers began a meeting that has prepared investors for an increase in rates from close to zero per cent.

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