Daily currency report

Sterling's rally proved to be short-lived as the session saw investors dump the pound following comments from the governor of the Bank of England, Mervyn King in which he stated that a weaker pound was both helpful and necessary to re-balance the British economy. In the US, existing home sales unexpectedly declined during August, sending the greenback higher across the exchanges, although the euro also remains well-supported among the majority of investors.

Sterling
The pound fell against all the other major currencies following reports that the Bank of England would welcome a drop in the value of sterling in order to boost the economy. The moves came after the Bank of England Governor, Mervyn King, said the weakening pound is "helpful" in rebalancing the economy.

US Dollar
The dollar gained against most of its major counterparts, making particular inroads against the beleaguered pound. The greenback was also able to arrest its decline versus the euro as an unexpected drop in existing home sales saw investors retreat back into risk aversion.

Euro
The single currency was buoyed after the German IFO index of business sentiment rose to its highest level in a year. The index for September came in at 91.3, which was below expectations, but still pointed to an economy showing distinct signs of recovery. The news sent the euro to its highest level against the US dollar in over 12 months, although the single currency eventually gave up these gains following disappointing American data.

Japanese Yen
The yen rose against all the other major currencies as Japanese companies continue to repatriate profits made overseas. Japan's exporters are taking advantage of an April 1 rule change from the government that waived taxes on these repatriated profits.

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