Daily currency report

The sterling slipped against the euro and the dollar after weak British housing figures added to a picture of a struggling domestic economy that might require a cut in interest rates. The dollar hit a six-month high against the euro then slipped as oil and commodity prices made a comeback.

Sterling (GBP)

The sterling has lost 6 per cent against the dollar this month. A poll by Rightmove showed that British house prices fell 4.8 per cent year on year. However, analysts said that the pound had made limited reaction to the house price figures, as weakness in the housing industry is already well established.

US Dollar (USD)

The dollar remains vulnerable to further rises in commodity prices as a consequence of the pressure these prices put on the US economy. As it stands, the euro has plunged nearly 6 per cent against the dollar in two weeks, and many analysts believe that the greenback's stronger tone is likely to last for a while as other economies succumb to the global slowdown.

Euro (EUR)

Eurozone inflation risks have risen and weaker economic growth will not automatically offset them, the Bundesbank said. Inflation expectations in the eurozone have also remained above levels consistent with mid-term price stability. The European Central Bank left interest rates unchanged at 4.25 per cent and insisted inflation was still its key fear even though risks to growth were taking hold.

Japanese Yen (JPY)

The Bank of Japan will probably keep rates on hold in a signal that crumbling export markets can no longer offer factories enough business to keep Japan out of recession. The economy suffered its biggest contraction in seven years in the second quarter, while exports to Asia weakened after sustaining growth in the face of a slump in US and European demand.