Daily currency report
Overview
The finance ministers of the G8 industrialised countries expect strong economic growth this year despite high oil prices, volatile US stock prices, higher interest rates and fears of inflation. On the final day of the two-day meeting, the ministers said that economic global growth was healthy and widespread.
GBP
It was a bad week for the British pound against the dollar and the euro yesterday. Analysts are now convinced that interest rates are likely to be on hold for the remainder of the year unless inflation overshoots the Bank of England's two per cent target.
USD
The US trade deficit widened less than expected in April figures. This added to the hopes that the long deterioration in America's trade position may be slowing. The prospect of further interest rates increases led to the dollar rising for a sixth day against the euro.
EUR
UNICE have urged the ECB to be cautious about raising interest rates following last week's 25bp rise.
JPY
Japan appears to be on track to achieve its longest post-war recovery according to the revised GDP figures. The Bank of Japan will soon begin to move interest rates up from zero, once deflation has been eradicated.