Daily currency report
Overview
Last week stronger-than-expected US retail sales figures and a better-than-expected trade balance figure dispelled analysts' expectations that the Fed will cut interest rates early next year.
GBP
The sterling hit an eight-year high against the yen and neared five-week highs against the euro as the recent run of strong data continues to lend support to the view that UK interest rates are set to rise in February next year. Against the US dollar, however, the pound fared less well.
USD
The US dollar posted gains against all the major currencies as investors continue to be buoyed by recent data that has suggested that the US economy may not require an interest rate cut from the Fed in early 2007.
EUR
The single currency slipped against the pound and the dollar as traders continued to take profit on recent euro strength. Elsewhere, the euro came under sustained attack from French politicians from across the political divide, calling for focus on growth rather than inflation.
JPY
The Japanese yen edged down against the dollar and hit an eight-year low versus the pound after an upbeat Tankan survey did nothing to alter expectations that the Bank of Japan will keep interest rates on hold next week.