Daily Currency Report

The sterling climbed to a two-and-a-half-year high against the euro and advanced against the dollar and yen amid continuing expectations of further monetary tightening in the UK which could see the Bank of England rise interest rates as early as next month.

GBP
The sterling continued to dominate the markets, extending its gains against the dollar, euro and yen. Employment data releases showed the month of December was stronger than expected thanks to a larger drop in jobless claims.

USD
The US Federal Reserve has kept interest rates steady for the last six months and following the release of solid US data, the Federal Reserve is expected to keep interest rates steady for some time.

EUR
The release of inflation data was in line with expectations and had little affect on the euro. Consumer prices rose, which left the annual pace of growth unchanged at 1.9 per cent. The trade surplus in the eurozone fell short of expectations but the revision in the prior month was quite substantial.

JPY
The yen slipped to a new 13-month low against the dollar as the Bank of Japan kept interest rates on hold at 0.25 per cent.