The dollar continued to be bruised on all sides as investors moved away from the greenback investing in high yielding currencies. Elsewhere, with markets expecting the BoE to raise rates to 5.75 per cent tomorrow, the pound could be sold off very heavily should the MPC leave rates unchanged.

GBP
The sterling continued to strengthen against the dollar on the back of an expected UK rate hike. With interest rates already at 5.5 per cent - the highest in the G7, the sterling has benefited from investors' appetite for carry trades. However, the pound lost ground against a boosted Euro after stronger than expected manufacturing survey.

USD
The dollar was the main loser on the currency markets, losing further ground both against the pound and the euro, as investors flocked to currencies whose interest rates are expected to rise further, eroding the dollar's appeal.

EUR
French President Nicolas Sarkozy reiterated his view that the euro was overvalued, renewing his call for the currency to be used to promote jobs and growth in Europe. The ECB has been angered by his comments, but it will not stop from doing what is necessary for the greater good, and as such will more than likely increase interest rates later this year, possibly as early as September.

JPY
Although Japan's Central Bank board member Boj Kiyohiko Nishimura said that the BoJ should not wait too long to raise interest rates, his remarks did little to move the market as many investors still see the BoJ raising rates in August, although some traders are now casting doubt as to whether this may happen.