Daily currency report

The pound soared against the dollar, as investors added to bets the BoE will raise interest rates in near future on the back of recent upbeat data. Elsewhere, the yen was among the biggest decliners, as waning concerns over credit markets encouraged investors to return to carry trades.

GBP
The sterling strengthened broadly, mainly against the dollar, as calmer financial markets boosted investors' appetite for risk, lifting high-yielding currencies and equity prices. Recent rises in interest rates and turmoil in credit markets mean the outlook is likely to be weaker still, challenging policymakers' assumptions that investment growth will continue to drive the economy forward.

USD
The US dollar continued to slide, as continued improvements in risk appetite forced the safe-haven currency lower against major counterparts. Many initially believed that the recent credit crunch would force the CB to ease its interest rate target, but it seems as though the recent discount rate cut has proved sufficient in calming market skittishness.

EUR
The ECB's first ever emergency injection of three-month funds was swamped with demand from banks but brought little relief to an inter-bank lending market beset by credit worries. Euro zone banks snapped up the €40billion in funding after dividing for more than three times the amount on offer, as the ECB tried to reduce borrowing costs in one of the markets hardest hit by the global credit squeeze.

JPY
The yen's slump was mainly attributed to the unchanged monetary policy decision by the BoJ and continued signs of improvement in stock and credit markets encouraged investor back into carry trades.

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