Daily Currency Report
Overview
The sterling rose to one-week highs against both the euro and the dollar on Friday, after Bank of England voiced his qualms about inflationary pressures.
GBP
The sterling initially fell against both the euro and the dollar on Friday as a result of the second release of UK fourth quarter growth data. The data revealed three per cent on the year. The sterling recovered much of the losses as Bank of England committee member Andrew Sentance stated in an interview with Britain's Times newspaper that he feared a pick up in demand could lead to higher inflation.
USD
One of the largest forces dampening growth for the US economy has been the continued deterioration of the housing market. Since the start of 2007, 22 sub-prime mortgage brokers have gone bankrupt and the asset-backed market has disintegrated with spreads rising rapidly.
EUR
German Ifo business climate index fell more than expected in Febuary to 107 from 107.9 in January and against the consensus figure of 107.5. Furthermore, German consumer morale unexpectedly dipped as concerns over a sales tax increase outweighed optimism about the economy and future incomes.
JPY
The three members of the Bank of Japan's nine-member board, who proposed raising interest rates in January, harboured the belief that keeping interest rates steady could excessively stimulate the economy as highlighted in the minutes of the central bank's January 17-18 meeting.