Daily currency report

The sterling slid to a fresh two-year low against the US dollar. The dollar retreated against a basket of currencies as oil prices rose on worries about supply and some investors started taking profits on the dollars sharp rise this month.

Sterling (GBP)

The British pound fell to a 12-year low on a trade-weighted basis, as weak UK house prices and retail sales data intensified fears of a recession, pushing the UK currency close to a record low versus the euro. Data from the Nationwide building society showed UK house prices fell 1.9 per cent in August. This was the 10th consecutive monthly decline and took the annual drop in house prices to 10.5 per cent, the largest fall since the data series began in 1991.

US Dollar (USD)

This morning saw the dollar slip as oil prices rose on supply concerns; however, there was good news in the US. The second quarter Gross Domestic Product figure was revised much higher than expected at 3.3 per cent. Not only did the June trade balance help, but also a pick-up in consumer spending and inventories helped lift the number.

Euro (EUR)

The euro extended gains as unemployment figures are at record lows. Inflation has been seen easing back from record peaks, inducing a positive outlook for the near future.

Japanese Yen (JPY)

Japan's inflation rate exceeded two per cent for the first time in a decade as prices of food and gasoline surged, according to recently released data. The Bank of Japan is not likely to raise interest rates anytime soon because the economy is on the brink of a recession and Governor Masaaki Shirakawa expects inflation will moderate as commodity costs ease.