Daily currency report

There was little movement of note on the exchanges as investors wait for interest rate announcements before taking up new FX positions. Both the ECB and the BoE are expected to leave rates unchanged although the Fed's surprise cut last month could be followed by other CB's.

GBP
The sterling lost ground as traders hesitated to take any large positions ahead of the BoE's interest rate decision. Many believe that the BoE will leave rates on hold as it waits to see if the credit turmoil has a wider impact on the UK economy; however, it's believed that the Bank may have to cut rates once by end year.

USD
The dollar gained ground against most of the majors after a report showed growth in the US labour market, which could bode well for important non-farm payroll numbers. If positive data is released, the dollar is expected to gain further against both the sterling and the euro in the coming weeks.

EUR
With the upcoming G7 meeting, many eurozone officials want to restrict the surging euro. However, lack of support from the US will not help their case. The euro has risen over seven per cent and five per cent against the dollar and the yen respectively this year, prompting calls from worried officials that eurozone economy will start to feel the negative effects.

JPY
The outlook for the yen versus the dollar has improved, but it is expected to remain weak against the euro in the short term. Both the yen and the Swiss franc look set to benefit from expected dollar weakness over the next few months as prospects for more US rates cut loom large.

Commercial Foreign Exchange Travelex Malta (Free phone: 800 733 22) www.travelex.com/mt/