Daily Currency Report

The main focus of attention this week will be the interest rate decisions of both the European Central Bank and the Bank of England. The ECB is widely expected to raise rates by a further 0.25 per cent after economic data released over the past month appears to have bolstered the case for an early August hike, however most analysts believe that the Bank of England will wait until early autumn before raising rates again.

GBP
The sterling climbed back up again, after weaker than forecast US growth data further reduced the likelihood of an August Federal Reserve rate hike.

USD
The dollar hit a two and a half week low against the yen after data showing surprisingly slow US growth in the second quarter further dampened expectations that the Fed would boost interest rates next week.

EUR
This week should see the ECB raise interest rates from 2.75 per cent to three per cent, to ward off the risk of inflation in the eurozone. This increase has already been priced into the market as the ECB flagged the interest rate increase, when it said the European Central Bank will "exercise strong vigilance" over risks to price stability.

JPY
Japan's industrial production rose a stronger than expected 1.9 per cent in June, indicating an economic upturn was intact. The strong numbers prompted the ministry to upgrade its assessment of industrial output, saying it is on a rising trend.