The major currencies see-sawed throughout the course of the day. Both the Bank of England and the European Central Bank kept their interest rates on hold as expected at 0.50 and one per cent respectively. Sterling started off on a high after positive house price data and rising share prices bolstered the pound, however, unfounded political rumours sent the pound tumbling. The euro also started on a high with positive eurozone retail sales figures, however, dropped later versus the dollar as Jean-Claude Trichet said it was extraordinarily important that the US authorities express support for a strong dollar.

Sterling
The pound strengthened versus a broadly weaker dollar as investors remained optimistic over the economic outlook; however, it was quickly dumped on concerns over Britain's political situation and (unfounded) rumours that the Prime Minister, Gordon Brown, would resign.

US Dollar
Comments from Federal Reserve Chief Ben Bernanke undermined the dollar as he expressed his concern over the size of America's fiscal deficits and his comments resonated throughout financial markets as many investors fear the implications that these deficits have for the US sovereign debt rating. However, the greenback recovered strongly against the pound as question marks over the political survival of Mr Brown prompted moves away from sterling and back into the US dollar.

Euro
The euro recovered from recent losses against the pound after eurozone retail sales figures were released in line with forecasts of 0.2 per cent month on month. Revisions made to the same figures from the previous month made an improvement to the year on year figure which added to positive sentiment.

Japanese Yen
The yen recovered strongly against sterling, but lost ground against the other majors as increased investor optimism reduced demand for the safe haven yen.

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

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