Daily currency report

The sterling ended up versus the yen, dollar and euro, as high yielding currencies made a slight comeback, benefiting from calmer markets after suffering heavy losses since the start of the month.

GBP
The pound gained significantly against the dollar, as British factory orders rebounded to their strongest level in more than 12 years. These figures boosted the pound, as offering further evidence that the UK economy is in robust health, supporting the case of those on the BoE's Monetary Policy Committee who are arguing for another interest rate hike. However, many investors expect rates to be kept on hold next time round, after the recent turmoil in financial markets.

USD
The Fed's strategy of increasing liquidity rather than resorting to a cut in the benchmark interest rate survived a third day. The Fed claimed that it had added $2 billion of temporary reserves to the banking system through overnight repurchase agreements. Speculation that the Fed might cut its benchmark interest rate soon was fuelled by US Senate banking Committee's chairman's comments, who claimed Fed's Chairman had informed him he would use "all available tools" to calm the markets.

EUR
The euro held steady against the dollar, ending the session slightly up against the greenback and it also posted modest gains against the yen.

JPY
The yen dropped against a basket of the most traded currencies, as gains in equities markets soothed worries of further risk aversion and halted the unwinding of carry trades. The BoJ ended the two day policy meeting by announcing that interest rates remained at 0.50 per cent.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/