Daily currency report

The pound initially rose strongly against the major currencies, however it ended the day down against the US dollar but up versus the euro and the yen as Federal Reserve chairman, Ben Bernanke, again underlined his commitment to tackle rising inflation. Elsewhere, the price of crude fell back, further lending support to the greenback.

Sterling (GBP)

The pound is on a broadly positive footing, mainly as a result of much higher than expected factory gate inflation data which appears to have reduced the probability of an interest rate cut in the UK for the foreseeable future. The data also adds to the pressure on the Bank of England, who will have to steer a difficult path between rising inflation and slowing growth.

US Dollar (USD)

The dollar recovered from a disappointing session and begins higher across the board as Ben Bernanke reiterated his intention to tackle inflation. Markets responded by bidding up the greenback as speculation grows that the Federal Reserve may even raise interest rates before the end of 2008.

Euro (EUR)

Strong German export growth was not enough to prevent the euro from sliding against both the US dollar and the sterling with positive data in those two regions proving more attractive to investors. With concerns lingering that eventually the world economic slowdown will take its toll, traders sold off the euro with improving interest rate prospects in the UK and US proving difficult to resist.

Japanese Yen (JPY)

The yen slumped to a three-month low versus the US dollar as strong rhetoric from US officials pushed the dollar higher across the board and the price of crude oil finally eased back. Interest rate expectations are also weighing on the yen, with the Bank of Japan set to begin its two-day policy meeting.