Daily currency report

The Bank of England and the European Central Bank cut interest rates by 50 basis points to historic lows of 0.50 and 1.50 per cent respectively. The euro held steady after the announcement, but dipped against the dollar after President Jean-Claude Trichet said that he could not exclude further monetary easing. Elsewhere the dollar firmed against most of its major trading partners, lifted by a return to safe-haven flows amid persistent worries about the global economy.

Sterling
The sterling weakened against the dollar after the Bank of England cut rates to a record low and announced an asset-buying programme. The pound remained on the back foot following the bank's announcement that it was launching a £75 billion programme of asset purchases - so called quantitative easing. This measure was announced to compliment the cut in the base rate of 0.50 per cent.

US Dollar
The dollar rose across the board as central banks in Britain and the eurozone cut borrowing costs, while anxiety about the global economy continued to enhance the safe-haven status of the US currency. However, the US economy continues to show signs of stress, and, according to the Labour Department figures released, there were more than 600,000 Americans filing claims for jobless benefits for a fifth straight week.

Euro
The euro slid against the dollar as European Central Bank President, Jean-Claude Trichet, signalled further cuts in the main refinancing rate after lowering it to a record 1.5 per cent. He announced that the European Central Bank is discussing and studying further non-standard measures to bolster the economy but has no pre-commitment on what steps it could take.

Japanese Yen
The yen reversed losses against the dollar, however, the move was mostly tied to positioning and profit-taking, as the outlook for a struggling Japanese economy remains gloomy.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/