Daily currency report

The Euro fell to a six month low against the dollar after a German business confidence survey posted its worst results in three years. Meanwhile, sterling fell close to a 12 year low against a basket of currencies amid fears that a weaker Euro-zone would create further problems for the UK economy. Elsewhere, the dollar lacked momentum as oil prices rose on concerns that tropical storm Gustav could threaten rigs in the Gulf of Mexico.

Sterling (GBP)

The British pound hit a two year low against a basket of currencies, with stalled UK economic activity being the main contributor. The pounds latest bout of weakness was compounded by a fall in UK house prices which fell 1.9 per cent in the month of August; the biggest annual drop since monthly records began in 1991. Investors are expecting the Bank of England will cut interest rates once inflation has peaked bringing them down to 4.5 per cent by the June 2009.

US Dollar (USD)

The dollar opened weaker against most currencies and spent all day recuperating its losses. Still, just as the dollar was climaxing, oil prices rose, lifted by the possibility that Tropical storm Gustav.

Euro (EUR)

The single currency moved further away from Tuesday's six-month low versus the Dollar as European Central Bank officials played down any chance for the next move in interest rates being down. Some officials even suggested that increases might be needed, despite an economy that is increasingly showing signs of shrinking and perhaps is already in a recession.

Japanese Yen (JPY)

The Bank of Japan board member Miyako Suda recently claimed that containing inflation is key to sustaining the economy's expansion, suggesting she's more concerned about rising prices than her colleagues.