Daily currency report

The euro soared to a new record high against the dollar as anxieties over US economic growth overshadowed the disappointment of lower than expected German investor morale figures. Elsewhere, the UK figures revealed CPI rising to record 3.8 per cent.

GBP

The pound secured gains against both the euro and the dollar, reaching a 3 month high against the latter, however, was clouded by worrying UK data. Rising food and fuel costs have been cited as the catalyst which has ultimately pushed UK inflation to an 11 year high. This is a significant increase from the 3.3 per cent in May and moreover is above the Bank of England's target level of inflation of 2 per cent. A rate cut will be increasingly unlikely to spark some life in an ailing economy as the Bank of England believes that inflation may top 4 per cent.

USD

The dollar suffered against both the pound and the euro capitulating to a 3 month low against the pound and a record low against the single currency. Federal Reserve Chairman, Ben Bernanke, dwelled upon the significant risks to economic growth, however conceded that inflationary pressures had intensified.

EUR

The euro was unable to stabilise on the gains made against the dollar due primarily to jawboning on both sides of the Atlantic and in addition Germany's ZEW investor sentiment fell to record lows. The inference is that whilst the US and the UK have not seen any resolution to the issues that have plagued them this year, the euro has continued to benefit.

JPY

The Nikkei fell 0.6 per cent, with banks extending the large losses amid deepening qualms about the financial sector. Moreover, Japan's tertiary sector index of service industry activity fell 0.2 percent in May from the previous reading.