Daily currency report

The pound continued its decline, plummeting to an all-time low's against the euro and a fresh two-and-a-half-year trough against the dollar, as well as sliding against most currencies. The US was on Labour Day bank holiday, so the main focus was on Hurricane Gustav and its effect on oil production.

Sterling (GBP)

The government was placed under further pressure as data released by the Bank of England revealed that mortgage approvals were at their lowest level since records began in 1993. This data further underlines the need for interest rates cut, but with no sign of inflation easing, the decision remains a double-edged sword.

US Dollar (USD)

Despite their being no activity in the US due to the Labour Day holiday, the dollar managed to firm against both the euro and the sterling. With hurricane Gustav being downgraded and the threat to oil production easing, oil prices dropped steeply by $4 per barrel. This lead to the dollar reaching five-month highs against the single currency and two-year highs against the sterling.

Euro (EUR)

The single currency reached an all-time high against the pound as poor economic data compounded recent downward moves for the pound while weak manufacturing data for the eurozone pushed the euro to five-month lows against the dollar.

Japanese Yen (JPY)

The yen climbed broadly in moves that were attributed to the slide in the pound and Australian dollar, the latter being consequential to the first rate cut in seven years. This has prompted market players to unwind carry trades.