Daily currency report

Both dollar and yen were heavily sold off as investors continued to focus on the higher yields available in other currencies rising expectations that both the ECB and the BoE will be compelled to increase their interest rates in the coming months, and this is serving to provide support across the exchanges for both currencies.

GBP

The sterling hit its highest level in almost 15 years against the dollar after stronger than expected UK output prices and housing data cemented expectations of an imminent interest rate hike. British core output price growth picked up to an annual 2.9 per cent in March. This reinforced expectations that the BoE would raise interest rates boosting the sterling's already attractive yield appeal.

USD

The dollar was under broad pressure against the majors after the G7 meeting. There is a growing concern about a possible US rate cut and a renewed focus on US trade imbalances. The markets shrugged off the positive capital inflows data and the dollar remained the biggest loser.

EUR

The euro hit a two-year high versus the dollar and an all-time peak against the yen after comments from the G7 meeting suggested officials were comfortable with the single currency's strength. Christian Noyer, an ECB governing council member, praised economic developments in the eurozone, highlighting in particular the stability of prices, flagging the rising prominence of the single currency.

JPY

The yen dropped to a record low against the euro and fell to its weakest level against the dollar in seven weeks after G7 finance officials refrained from criticising the Japanese currency's decline.