Daily currency report

The US dollar moved to a six month high against a number of currencies, driven by a rapidly deteriorating economic outlook for the rest of the world. The sterling's slide continued to gather momentum among fear that Britain could fall into recession.

Sterling (GBP)

The negative outlook for growth, alongside increased expectations for a spike in inflation to be followed by a rapid decline in prices suggest there is around an 80 per cent chance that the Bank Of England are going cut interest rates this December and potentially again in February next year.

US Dollar (USD)

The US Dollar rallied against the euro and GBP as investors shifted their view on the global economy's ability to withstand a downturn initiated in the US. A steep decline in commodity and energy prices also aided the US currency. However, US retail figures dropped as auto sales weighed on the headline result. Sales figures in general remain skewed due to tax rebate spending.

Euro (EUR)

The eurozone economy contracted in the second quarter for the first time since the single currency was introduced. All three of Europe's largest economies France, Germany and Italy posted contracting GDP figures. Germany was down by 0.5 per cent and France and Italy posted a 0.3 per cent fall. Industrial production for the euro area continued to slip and weighed on the currency.

Japanese Yen (JPY)

The Japanese economy contracted by 0.6 per cent in the second quarter, its worst quarterly performance for seven years. A slowdown in consumer and business spending put a halt to the longest economic expansion in Japanese history since World War II.