Daily currency report

Both the ECB and the BoE gave out no surprises as they kept their interest rates on hold. The announcements came in spite of liquidity concerns in the money markets which had fuelled speculation that rate cuts may have been on the cards.

GBP
The sterling rose against the euro and the greenback as the BoE decided to keep interest rates on hold at 5.75 per cent. The announcement was no surprise even though a minority of investors had begun to price in the probability of a rate cut at some point this year.

USD
The dollar is holding steady ahead of the non-farm payrolls report as investors try to gauge the likelihood of the US economy slipping into recession. While last month's report revealed a reduction of 4,000 jobs, economists forecast a growth of around 100,000 new jobs this month. A stronger than expected number would be dollar positive and trim expectations of more Fed rate cuts this year, while weak figure could result in renewed dollar-selling.

EUR
The ECB left interest rates unchanged at four per cent, but the euro took a hit after ECB President, Jean-Claude Trichet, adopted a more cautious tone in the news conference following the announcement, highlighting downside risks to growth.

JPY
A BoJ survey showed than an increasing number of Japanese people feel that the economy has worsened as they face higher gasoline and food prices. The yen is again under pressure as investors are cautiously moving back into carry trade positions as persistently weak economic data has greatly reduced the possibility of an interest rate hike any time soon.

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