Daily currency report

The credit squeeze for British households and businesses looks set to intensify over the coming months, as lenders grow increasingly nervous over the economic outlook, the Bank of England's quarterly survey of credit conditions showed.

GBP
The latest release of disappointing data amid record low mortgage approvals and a slowing housing market, while inflation stays stubbornly above two per cent, has sparked further talk of interest rate cuts in the UK. Surveys suggest that the credit crunch is spreading further into the UK economy and highlight the dilemma facing the Bank of England as it wrestles with slowing growth and rising inflation.

USD
The US economy is expected to grow just 1.2 per cent in 2008 as a result of continued deterioration in the US housing and financial markets, according to the latest forecast by Royal Bank of Canada. Elsewhere, the International Monetary Fund is to cut its forecast for global GDP growth this year to 3.7 per cent next week, down half a point from its previous projection. This continued to weigh on the dollar and the greenback was down against the majors.

EUR
European shares dipped in volatile early trade as profit taking in banks after a two-day rally offset gains in commodity stocks. Slightly weaker German building sector activity data did little to impact the euro, as did a Reuters report which showed economists pushing back their calls for an interest rate cut as inflationary pressures have reached a seven-and-a-half-year high.

JPY
Asian stock markets declined for the first time in three days after a US jobs report renewed concern that growth in the US economy is slowing.

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