Sterling lost ground after the Bank of England minutes revealed that the Monetary Policy Committee voted 6-3 in favour of increasing its quantitative easing program. Meanwhile, the dollar fell against the euro and a basket of currencies.

Sterling

In defence of the unexpected extension to the central bank's asset purchase scheme, the Monetary Policy Committee argued that too little stimulation would mean inflation remaining below its target of two per cent for "a sustained period of time and might harm public confidence in the recovery, causing it to falter". The pound improved due to the Confederation of British Industry industrial trends survey being released and coming in at -54, which was an improvement over the -59 seen in the prior month.

US Dollar

The dollar went down against a basket of currencies, particularly versus the euro, due to a rebound on Wall Street reducing safe-haven demand for the US currency. A recovery in US stocks and a more than four per cent jump in oil prices lifted commodity currencies.

Euro

The euro was range bound against sterling, while strengthening against the US dollar. German producer prices fell at their fastest pace in 60 years last month as energy costs declined. Meanwhile the European Central Bank, which cut its benchmark interest rate to a record low of one percent in May, has downplayed the threat of deflation in the euro-region economy.

Japanese Yen

The yen rose as a sharp slide in China's stock market added to worries about the world economy and increased the Japanese currency's safe-haven appeal. Bank of Japan board member, Atsushi Mizuno, warned the country's export recovery may slow from autumn as global growth remains fragile, suggesting he may favour keeping the bank's unconventional policy steps in place beyond December.