The sterling fell to a two-week low versus the dollar after the biggest drop in UK retail sales in over two decades. Elsewhere, the dollar rose to a two-week high against the euro as the single currency came under heavy pressure after a slew of soft eurozone data cooled expectations of higher interest rates.

Sterling (GBP)
The sterling weakened, from the highest level against the euro in seven weeks, after British retail sales dropped by 3.9 per cent in June, the most since at least 1986 when records began. Analysts claimed the news heightened the chances that the Bank of England would cut interest rates, even though one member had voted for a rate rise to combat inflation at its last meeting.

US Dollar (USD)
The dollar made gains against the euro and the pound, mainly due to poor data releases from the eurozone and the UK. However, the dollar failed to capitalise on the early trading session gains, and retreated slightly, after the release of the existing home sales.

Euro (EUR)
The euro fell to the lowest level against the dollar in more than two weeks, as a drop in business confidence in Germany reduced speculation that the European Central Bank will raise interest rates again this year. European Union Monetary Affairs commissioner Joaquin Almunia claimed that the overvalued euro and the dollar facing the risk of another fall is a real problem. However, he stated that the first problem to be tackled should be inflation.

Japanese Yen (JPY)
The yen rose against the dollar and the euro, as a decline in US stocks prompted investors to pare holdings of higher-yielding assets financed by loans in Japan. The yen rose broadly as Asian equities fell and triggered the unwinding of carry trades.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/