Daily currency report

In spite of surprisingly strong durable goods data, the dollar remained under pressure across the currency exchanges as other economic data continues to disappoint.

GBP

The sterling held firm against the dollar and the euro in the wake of slightly better than expected British economic growth data, which has served to illustrate that the economy is able to accommodate a further tightening of monetary policy. With GDP's rise by 0.7 per cent and the annual rate of house price inflation standing at 10.2 per cent, expectations that the BoE's Monetary Policy Committee will increase the cost of borrowing to 5.5 per cent next month are growing.

USD

The dollar was sold off again as traders focused on disappointing sales of new homes in the US reporting that new home sales rose by 2.6 per cent in March. However, this was down by 23.5 per cent on the same month in 2006 and stoked fears that the downturn in the housing market could feed through into other areas of the economy.

EUR

There was more good news for the single currency as falling unemployment, the prospect of better wages and general optimism about the economy has delivered a boost to German consumer confidence. Elsewhere, French firms' business confidence also rose in April, providing scope for the ECB to raise interest rates again if need be.

JPY

The BoJ is set to release a glut of economic data, hogging the headlines, together with the consumer price data. If the BoJ's report puts more emphasis on upbeat economic growth, there could be speculation of an earlier than expected hike.