Daily currency report

The sterling begins the week on a slightly weaker footing against the dollar following last week's decision on interest rates. If the figures to be released in the US are strong, the dollar will look to continue its recent rebound against the pound.

GBP

The pound is slightly weaker against the US dollar and relatively unchanged versus the euro. With CPI and retail sales reports coming out, worse than expected levels could quell the need for an interest rate hike next month.

USD

Contrastingly with the UK, reports in the US have shown that this week's CPI and retail sales figures are likely to be good numbers, consolidating the dollar against the pound. Figures released showed that the US trade deficit shrank much more than expected in April, which raised hopes for stronger US economic growth.

EUR

The pound has made very slight gains against the euro since Friday after German industrial production suffered its biggest fall in nearly seven years in April. Activity in all sectors unexpectedly declined, suggesting the country's recent growth spurt is losing momentum. The EU's Economic and Monetary Affairs Commissioner Joaquin Almunia has said that the EU exports are likely to stay strong despite euro gains.

JPY

Although Japanese machinery orders rose less than expected in April from March the data wasn't weak enough to alter market expectations that the BoJ will raise interest rates in August. Providing further fuel to the belief that a rate hike is likely is the recent outflow of yen from Japan from institutional and also individual investors.