Daily currency report

The dollar tumbled against the major currencies as investors fretted about possible fallout from weakness in the US sub prime mortgage market. Elsewhere, data released in the UK painted a picture of a reasonably robust economy, while China's yuan rebounded against the dollar and closed at a post-revaluation peak.

GBP
The sterling scaled to dizzy heights against the dollar as it soared to its highest level in two and a half decades, boosted, after a report showed sales at UK retailers increased at the fastest pace since March, stoking speculation the BoE will raise interest rates from a six-year high.

USD
The dollar slumped to record lows against the euro and dropped the most since March versus the yen on speculation the housing market's slump will worsen. The dollar also sank against the Swiss franc, British pound and Danish Krone after Standard & Poor's warned it may cut ratings on $12b of bonds backed by sub-prime mortgages.

EUR
The euro was boosted from comments by Luxembourg's PM, claiming at a meeting in Brussels, that the region's growth situation is excellent. This helped fuel speculation that the ECB may hike rates again in September to 4.25 per cent with some economist's betting on rise to 4.5 per cent by the end 2007. Angela Merkel was also quoted as saying that Germany strongly opposes criticism from Nicolas Sarkozy about the ECB and the euro strength.

JPY
The yen rose against a basket of currencies, rebounding from record low against the euro before the start of the BoJ's rate-setting, clawing back some of its recent losses as investors scaled back their risk exposure.

Commercial Foreign Exchange Travelex Malta, freephone: 800 77 33 22, www.travelex.com/mt/