Daily currency update

Trading was dominated by another strong euro performance while the dollar weakened on the back of rising oil prices, falling stock prices and the Federal Reserve lowering their 2008 growth forecast. Elsewhere, Canadian CPI figures showed inflation was on the rise, speculating that the Bank of Canada will keep rates on hold.

Sterling (GBP)

It was another relatively quiet day in terms of economic data and the pound once again found itself taking direction from movements in other currencies - most notably the euro. The Bank of England's minutes from April's policy meeting revealed no surprises, however, faced with inflationary pressures on one side and a slowing economy and the fear of rising unemployment on the other, the BoE's next move will be watched with increasing scrutiny.

US Dollar (USD)

Increasing inflation concerns and record oil prices contributed to a fall in US equity markets, leading the Federal Reserve to cut their 2008 growth forecast from an optimistic two per cent to as little as 0.3 per cent. As a result the dollar was hit heavily.

Euro (EUR)

The positive data by the German IFO propelled the single currency upwards against all the other majors as investors bid up the Euro. Forecasters have long predicted that Euro-zone interest rates will remain on hold throughout the year. However, inflationary pressures combined with positive German data has supported rumours that the European Central Bank may need to increase rates in turn leading to renewed backing of the euro by traders and investors.

Japanese Yen (JPY)

The Yen was given a welcome boost as figures revealed Japan's exports rose in April by four per cent year on year.