Daily Currency Report
Overview
Uncertainty over future ECB interest rates in addition to the uncertainty of a looming MPC interest rate hike, intertwined with the uncertainty of the Fed's interest rate decision has created a great level of speculation and turbulence in global markets over the last couple of weeks.
GBP
Hawks argue that a rapid growth in money supply, a housing and commercial property recovery, a broad-based strengthening in economic activity and with inflation above the two per cent target mean the MPC should act now.
USD
The dollar edged higher against the euro as short-term players covered short positions ahead of the European Central Bank's policy meeting.
EUR
It is believed the ECB will raise eurozone rates by 0.25 per cent and the market will be very shocked if there is no change. Following this, the euro lost ground to both dollar and sterling.
JPY
With an empty economic calendar the yen continued trading unchanged. It is perceived that the BoJ is worried that interest rates are too low and will contribute to excessive investment.