Daily currency report

Weak housing data weakened the pound as it prompted fresh speculation that the Bank of England's monetary policy committee may be forced to lower interest rates sooner than had been expected. By the close of the session sterling had slipped to two-week lows against an array of currencies. Elsewhere, the greenback drew a degree of support from data that showed the trade deficit to have shrunk by far more than had been expected.

GBP
The sterling was heavily sold-off as data from the Royal Institution of Chartered Surveyors (RICS) showed UK house prices falling at their fastest pace in two years. RICS blamed the downward trend on a combination of factors, such as higher interest rates and lenders tightening their lending criteria.

USD
The greenback rose against the pound and held steady versus the euro as data revealed that the US trade deficit narrowed by more than expected in August. The deficit fell 2.4 per cent to $57.6 billion, the lowest monthly shortfall since January. The strong data is partly a result of a weak dollar, which has given American exports a competitive advantage.

EUR
The euro made gains across the board, as traders continued to back the currency, almost by default, as speculation grows that rate cuts are looming both in the US and the UK. European policy makers have worried in recent weeks that a stronger euro will take its toll on growth.

JPY
Japanese economics minister, Hiroko Ota, said that she was in agreement with BoJ governor, Toshihiko Fukui, in her belief that Japan is on track to escape the spectre of deflation. The BoJ left rates on hold.