Daily currency report

The Bank of England and the European Central Bank left interest rates unchanged in line with market expectations. However, in a surprising move the BOE released a statement following their decision for only the third time when they have left the rates unchanged.

GBP
The BOE left interest rates unchanged at 5.75 per cent, but broke with tradition and released a statement following the decision. The BOE have only ever released a statement following a no change decision twice before, once in 1998 and the last time in 1999. The statement indicated that it is too early to tell how much consumers and companies would suffer from the disruption in the world financial markets but added that inflationary dangers still lurked and the economy was running close to its limit.

USD
The greenback slumped against the other majors as investors looked to the release of non-farm payrolls report, amid growing concern over the impact of the credit and housing market crises. Trading in the dollar was sidelined by interest rate announcements in the UK and eurozone.

EUR
The ECB left interest rates unchanged at four per cent, and saw the euro rally against most currencies as ECB President Jean-Claude Trichet let the markets know in his following speech that they had not given up on raising rates this year. Elsewhere, the German trade surplus widened in July as exports showed little changed but imports dropped substantially by 2.4 per cent.

JPY
The yen headed for a weekly gain against 14 of the 16 most active currencies as declines in Asian stock markets prompted investors to shun the risk of trades funded with loans in Japan.

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