Daily currency report

After Monday's bank holiday, the sterling continues where it left last week; holding steady against the US dollar, but under pressure versus the euro. Elsewhere, the price of crude oil continues to dominate headlines, as the cost of a barrel remains close to its recent high of $135pb.

Sterling (GBP)

Last week was a mixed bag for the pound, which rose against the US dollar, but held near recent lows versus the euro. Most commentators have attributed the sterling's progress against the US dollar to dollar weakness rather than any significant strength in the pound.

US Dollar (USD)

The greenback remains under pressure across the exchanges, coming under severe pressure brought about by rising oil prices and the persistent threat of "stagflation". This represents the exact dilemma which currently confronts the Federal Reserve. Last week a University of Michigan survey revealed that inflation expectations lie at a 26-year-high, and core Producer Price Inflation is also rising. On the other hand, however the minutes of the last Federal Reserve meeting revealed that the economic slowdown is still prominent in central bankers' minds.

Euro (EUR)

The euro started the week on a strong footing, having risen against the US dollar as a result of further rises in the price of crude oil. However, data revealed threatens to undermine the euro's progress, after an unexpected fall in the German GFK consumer sentiment index fanned worries about the health of the eurozone economy.

Japanese Yen (JPY)

The yen fell to a one-month low against the euro as a rally in Asian stocks encouraged investors to add to holdings of higher-yielding assets funded in the Japanese currency.