Sterling rose to almost one-month highs against the US dollar. Better than expected retail sales figures helped boost the pound as an increased in consumer activity ahead of the World Cup saw a 0.6 per cent rise in spending.

Sterling

UK retail sales figures released were higher than expected. Figures showed that sales rose six times faster than expected to 0.6 per cent in May. Gains were made largely in purchases ahead of the World Cup as consumers flocked to electrical stores and stocked up on food and drink. The improved spending figures helped offset a weaker than expected CBI survey which showed a strong decline in industrial trends as both factory orders and the export book balance slipped.

US dollar

The dollar fell against both the pound and the euro as the economic data released in the US pointed towards a slower recovery than markets had at first anticipated. Jobless claims jumped to 472,000 which were considerably higher than the predicted 450,000 level. Regional manufacturing also saw a strong decline. Extremely weak inflation figures saw a monthly fall of -0.2 per cent.

Euro

The Euro rose to a three-week high against the dollar after a well-received Spanish government bond auction eased some concerns over the ability of the country to service its debt. Elsewhere, it was the first day of the EU summit and Europe's leaders made fresh attempts to restore confidence in its financial system as they agreed to publish detailed results of "stress tests" on the health of 25 big European banks.

Japanese yen

The yen lost some of its earlier gains, as Japanese retail sentiment sank to its lowest levels in four months. This coupled with stronger than expected data released in the UK saw the yen drop to a one-month low against the pound.