Daily currency report

In an extraordinary day's trading, sterling plummeted by over 3c against the US dollar on the news that the credit agency, Standard and Poor, lowered its outlook on the UK's sovereign debt to "negative". The move, which puts Britain's UK "AAA" rating under threat, caught investors unawares, prompting them to dump sterling in favour of the US dollar and the euro. However, the sterling made a remarkable turnaround as there is a growing belief that the US "AAA" rating will also come under threat.

Sterling
After sterling's mixed trading, investors are awaiting the release of the second estimate of GDP for Q1. No revisions are expected to the initial figures of a 1.9 per cent contraction during the first three months of the year.

US Dollar
The dollar reversed earlier gains made against the pound and plummeted to its lowest level this year against all the other major currencies. Growing worries about the size of America's debt eroded the greenback's appeal.

Euro
The euro soared to its highest level this year against the greenback as concerns over the size of America's debt weighed heavily on the dollar. The euro was also underpinned by data showing a further decline in the pace of contraction within the 16-member bloc's manufacturing and services sector.

Japanese Yen
The yen continues to be relatively well supported across the exchanges after comments from Finance Minister, Yosano, who said that the Ministry of Finance did not advocate market intervention to weaken the yen at this time.

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