Daily currency report

Profit taking saw the pound edge away from a two month high against the dollar while the euro recorded gains against its major rivals.

Sterling

Sterling found itself under pressure after a weaker than expected survey of the UK services sector highlighted the fragility of the country's economic recovery, and prompted investors to profit take off of the pound's recent rally. The CIPS services PMI activity index fell to 54.47 in June from 55.4 in May due to subdued new business and a record monthly drop in confidence. This was weaker than forecast and the lowest level since August 2009.

US dollar

The dollar gained against the pound, with traders wary of chasing the dollar lower with markets closed in the US in observance of Independence Day. Concern that the US economy could be heading for a double dip recession had dragged the dollar to a near two-month low against a basket of currencies.

Euro

The single currency rose briefly versus the greenback after the eurozone Sentix investor's sentiment improved to -1.3 in July from -4.1 the previous month, beating expectations for a fall to -5. There was little reaction to the weaker than expected retail sales figures, with consumer demand in the eurozone being near non-existent for months now. Sales came in at 0.2 per cent month on month, while the prior month's data was upwardly revised from -1.2 per cent to -0.9 per cent month on month.

Japanese yen

The yen continued to strengthen as comments from Japanese officials landed on deaf ears. The yen is benefiting from safe haven flows after comments made by a former IMF economist, who stated that China's property markets are beginning to collapse and will soon hit the banking system.