There were no surprises as both the Bank of England and the European Central Bank kept interest rates at their current levels of 0.5 and one per cent respectively. Although this was a widely anticipated scenario, there still remain some qualms over the Bank of England's "wait and see" approach to their quantitative easing policy. The European Central Bank's decision to keep their rates on hold did little to change the status of the euro which remained buoyant throughout the session. Slightly better than expected retail sales and a fall in weekly jobless claims in the US saw the greenback remain under pressure.

Sterling
Sterling experienced a moment of relief and rallied after the Bank of England announced that it voted in favour of no change to its monetary policy. Prior to the meeting, the pound had been hindered by very weak industrial and manufacturing output figures and this had led to anxious speculation that the central bank would expand its quantitative easing programme.

US Dollar
The dollar rose after the Federal Reserve Chairman, Ben Bernanke, indicated monetary policy may have to be tightened as a recovery takes hold. The comments lifted the greenback off 14-month lows against a basket of currencies. Much of this can also be attributed to the Asian central banks, which intervened in the currency markets in an attempt to slow the slide of the dollar.

Euro
The euro saw little reaction to the announcement as the European Central Bank kept their key interest rate at one per cent. European Central Bank president Jean-Claude Trichet cautioned against hopes of a speedy economic recovery and warned against "excess volatility and disorderly movements" in exchange rates which "have adverse implications for economic and financial stability".

Japanese Yen
Official figures revealed that Japan's current account surplus widened by 10.4 per cent to 1.171 trillion yen in August, compared with a year ago as a rise in demand helped to ease declines in exports.

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

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