Daily currency report

Although there was some respite, the dollar remains mired near a 26-year low against the British pound, and close to an all-time low versus the euro while the yen headed for its seventh consecutive weekly loss against the euro.

GBP
The sterling headed for its second weekly gain against the dollar, driven by growing evidence that the BoE's monetary policy committee will be compelled to increase interest rates in May. With a day of consolidation, due to falling stock markets, investors took profit on the pound's recent rise and left sterling unable to make any further gains.

USD
The greenback arrested its recent slide as traders took profit on recent currency movements. However, the respite is likely to only be temporary, as the outlook for the dollar appears likely to deteriorate further with an array of key economic data due for release next week.

EUR
The euro remains well supported on the currency exchanges, rising yet again versus the yen and the US dollar, posting also moderate gains against the sterling, boosted by the German Finance Minister's comments that January's three per cent increase in VAT didn't impact economic growth with positive economic indicators.

JPY
Japan's economy is on the road to recovery and the yen, already beginning to reflect this, is currently at acceptable levels. With borrowing costs in Japan currently fixed at 0.5 per cent, investors have been borrowing heavily in yen to make investments in higher yielding currencies, contributing heavily to the yen's decline.