Daily currency report

The pound has been the main beneficiary from the pick up in risk appetite. Concerns about the depth of recessions are set to remain very much in the fore.

Sterling

The Bank of England kept interest rates on hold at 0.5 per cent. The bank is also set to continue with quantitative easing in an attempt to boost spending and bolster the UK economy. The latest interest rate decision came shortly after economic data showed exporters were benefiting from a weaker pound.

US Dollar

Markets are waiting to see how US corporations, especially banks, fared in the first quarter of 2009. There are signs that the financial sector may be starting to stabilise after news that Goldman Sachs posted a higher-than-expected $1.7 billion profit which helped lift sentiment. Wells Fargo also surprised investors by bucking the recession, saying it expects a record net profit. Offsetting the more positive environment in the US is the expectation that General Motors will be forced to file for bankruptcy.

Euro

Prices slumped in March from a year earlier and German inflation levels continue to be negative on a month-to-month basis. Nevertheless, the European Central Bank is still adamant that deflation risks are low, even though it has acknowledged that negative inflation for a few months ahead is a likely prospect. The single currency was also weakened on concern that the European Central Bank will signal they may continue to lower interest rates to support economic growth.

Japanese Yen

Japan formally unveiled its record $150 billion stimulus package in an attempt to revive its flagging economy. The plan is aimed at protecting livelihoods and to encourage future growth, according to Japanese Prime Minister Taro Aso. The 15.4 trillion yen package includes measures to boost fuel-efficient vehicles and consumer electronics and share prices in the industry rose as a direct result.