Daily currency report

The sterling hit a four-month high against a basket of currencies, extending previous day's gains after BoE's minutes suggested that interest rates may rise in July, rather than August. Elsewhere, the yen's weakness continues, reaching a four-year low against the dollar and a fifteen-year low against the AUD.

GBP

Among the majors, the sterling held it's own against the US dollar, thanks to continued optimism about further interest rate hikes and stronger economic data. The CBI industrial orders book grew faster than expected and this further supported the potential for interest rates to hit six per cent by the end of the year.

USD

The factory output report on Thursday showed acceleration in June, which helped the dollar edge higher against most major currencies, offsetting the negative impact from signs of stress in the US housing sector. With no US data due for release, trading should continue to remain quiet.

EUR

The euro hit a four-month low against the pound, but was range bound against the US dollar, as the currency pair traded in a very narrow range throughout the US session. The euro's strength against the dollar has diminished Germany's export vitality but domestic demand is picking up and the economy is in good health overall.

JPY

The yen weakness continued as the appetite for carry trades is still very strong, due to further speculation that interest rates will remain at the current low level of 0.50 per cent. This caused the yen to hit a four and a half year low against the dollar, a fresh 15 year low against sterling and a sixteen year low against the AUD.