Daily currency report

All eyes this week will be on Thursday's European Central Bank Monetary Policy decision with interest rates expected to be kept on hold.

GBP

Prime Minister Gordon Brown is set to begin to outline plans to win back British voters' support after his Labour Party suffered its worst local election losses in four decades. Brown has already identified the property market as a focus for his government. Britain's economy will grow by only 1.6 per cent this year, the slowest since the last recession ended in 1992 with banks choking off mortgage lending after the sub-prime mortgage market in the US collapsed last year, ending a decade-long boom in house prices.

USD

Losses in the dollar may be limited by speculation the Federal Reserve will pause lowering borrowing costs after cutting its benchmark rate by a quarter-percentage point to two per cent last week, the seventh reduction since September. Former Federal Reserve Chairman Alan Greenspan said the US has slipped into an awfully pale recession and may continue to languish for the rest of the year.

EUR

The euro rose against the dollar, snapping a two-day decline, as traders bet the European Central Bank will keep interest rates at a six-year high this week. The currency also gained for a second day versus the yen as economists said the ECB will leave borrowing costs at four per cent after the European Commission raised its inflation prediction

JPY

According to Japan's Finance Minister , Japan, South Korea and China are discussing creating a pool of $80 billion in Asian foreign-exchange reserves to be tapped by nations in case they need to protect currencies.