Daily currency report

The euro fell to a six month low as German business confidence survey posted its worst results in three years. Meanwhile, the dollar index touched its highest level this year as the greenback continued its rally. Elsewhere, the pound continued to suffer, dropping to a 12-year low against a basket of currencies as data showed UK mortgage were still 65 per cent lower year on year.

Sterling (GBP)

Recent weeks have seen the sterling sell off sharply against a basket of currencies, as investors dumped the currency on the view that weaker European economies would hurt the UK, which continues to suffer from the credit crunch. The sterling remains vulnerable because of perceived imbalances in the economy, both in terms of trade and because of consumer debt at a time when credit conditions are tightening and disposable income is falling.

US Dollar (USD)

The dollar has entered a period consolidation against the major currencies following the momentous rally started earlier this month. Consumer confidence figures came in above forecast and were up for the third consecutive month.

Euro (EUR)

The euro is down more than 6 per cent this month and is looking set for the biggest monthly fall since its 1999 launch. Despite the recent easing on energy prices the European Central Bank remains very concerned with inflation but the recent economic data has been so bad that the Governing Council could be pressured to review its monetary policy. In fact, traders expect rates to be cut by nearly 50 bps over the next 12 months.

Japanese Yen (JPY)

The Japanese yen held steady against all majors, as the markets start to speculate on the plethora of data due for release.