Daily Currency Report

Trading was dominated by interest rate announcements from the ECB and the BOE. In the event, the European Central Bank opted to raise its benchmark interest rate to 3.75 per cent, while the BOE's MPC kept their own rate on hold at 5.25 per cent.

GBP

The sterling held steady against the euro and the yen, but slipped against the US dollar as the Bank of England decided to keep interest rates on hold at 5.25 per cent for the second month running. The announcement was broadly in line with market expectations, although with core inflation still running well above the Bank's two per cent target, the possibility of further rate hikes remains.

USD

With no significant data out in the US, the dollar had a relatively quiet but successful day as it strengthened further against the yen, the euro and the pound.

EUR

The European Central Bank raised interest rates by 25 basis points to 3.75 per cent. This was in line with expectations and did not result in a lasting reaction in the currency markets. The comments that followed the decision had more of an impact on the market and saw the euro fall against the dollar.

JPY

The yen was on the back foot as the dollar, pound and other major currencies bounced back strongly. With global stock markets recovering from the recent sell-offs, investors are beginning to feel more comfortable about rebuilding carry trades.

Commercial Foreign Exchange Travelex Malta (Free phone: 800 77 33 22) www.travelex.com.mt