In the UK, GfK consumer sentiment survey was released and did not live up to expectations while the euro rose to 12-week highs against the US dollar as investor confidence in the eurozone was sustained by the latest release of upbeat economic data, which has contrasted to the data seen so far in the US as the greenback is being put under a lot of pressure after a raft of worse than expected data.

Sterling

Despite some disappointing data releases, the pound was able to hold on to most of this week's gains. The Bank of England released its consumer credit figures which were weaker than forecast at -0.098. Money supply figures remained flat at 0.0 and mortgage lending came in below forecast at 0.665. There have been concerns that Britain's housing rally may be coming to an end after a recent run of worse than expected data from the property sector. This was further evidenced when the Nationwide building society showed that house price inflation in the UK continued to ease off in July.

US dollar

The dollar fell as US jobless claims fell to 457,000 in the latest week. Although the number still remains high, it does point to a slowly recovering job market. There was no pullback in risk appetite and the greenback finished the day near fresh three-month lows against the euro and down against a basket of currencies as dollar positions continued to be unwound.

Euro

The single currency continues to find support from positive data out of the eurozone. A jump in eurozone economic sentiment to a 28-month high surprised investors as it came in at 101.3 for July. Investors were expecting a modest improvement in economic sentiment but this unexpected result conspired to lessen investor indifference towards the euro amid the sovereign debt crises.

Japanese yen

Economic data released in Japan was not very encouraging. Industrial output fell unexpectedly to 1.2 per cent and unemployment rose to 5.3 per cent from previous 5.2 per cent. Despite the bad news, the Japanese yen rose to an eight-month high against the US dollar as it remains the safe haven currency of choice.

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