Daily currency report

The dollar remained weak as data showed that existing home sales had slowed in March and consumer confidence was down in April. The pound and the euro pounced on the back of this data and posted significant gains.

GBP

The sterling was again strong against the dollar after testimony from the BoE's Monetary Policy Committee, to a parliamentary committee, gave very firm indications that the market should expect higher interest rates in the coming months. The pound was bolstered further after weak US housing data put further pressure on the already beleaguered dollar.

USD

The dollar weakened again against the pound and euro. The Fed is caught in a "piggy in the middle" situation because, although there are signs again that the economy is weakening, inflation could still show signs of rising. This may compel the Fed to hold rates at 5.25 per cent even in the face of a softening economy.

EUR

The euro strengthened against the dollar as speculation mounted yesterday that slowing US growth might prompt the Fed to cut rates this year. Many analysts believe that the ECB will raise rates from 3.75 per cent in June to four per cent and, with further pressure to come on the dollar, the euro could easily hit record highs against the greenback .

JPY

Japan's trade surplus jumped to a record high in March, as exports grew 2.4 per cent despite a slowdown in the US economy. Japan's export strength was shown when Toyota outsold General Motors, the world's biggest car manufacturer, for the first time in Q1, knocking GM off the top spot in global sales position held for 76 years.