Daily currency report

Trading was particularly dominated by the sterling while the markets are waiting for the European Central Bank's decision on Monetary Policy, where a 0.25 per cent hike is already priced in.

Sterling (GBP)

The sterling opened trading under pressure from negative data from the UK construction industry and, unsurprisingly, the housing market. Construction activity fell to its lowest level in 11 years. Further gloom was provided by the UK's beleaguered housing market as the UK housing sub-index and British housing equity both came in with negative figures.

US Dollar (USD)

The greenback opened to rather poor private sector employment figures from payment processing firm ADP. However, US Treasury Secretary, Henry Paulson, was again in the news as he suggested that inflation was becoming the main focus of many countries across the world, fuelling speculation of a July rate hike. This news has helped the dollar claw back some of its recent losses.

Euro (EUR)

The euro held steady trading ahead of the interest rate decision by the European Central Bank. The single currency relied mainly on UK and US data for movement. The governor of the ECB, Jean-Claude Trichet has already stated that inflation may "explode" if the bank is not decisive when it makes its decision. Investors will be looking for clues as to whether the hike is just the start of monetary tightening cycle.

Japanese Yen (JPY)

The yen fell against a basket of currencies over the course of trading as continued equity market woes took their toll on Japan's currency. Although Japan's economy seems to be in a fair state, ongoing economic uncertainty grows in the face of falling stock markets in the West and the ubiquitous worries of soaring energy and food prices.