The two main driving forces behind currency markets remain the same as the euro will remain under pressure heading into the weekend as EU leaders gather to discuss plans to solve the European debt crisis. On the other hand dollar gains will be limited by higher oil prices, which are being supported by escalating tensions in the Middle East. Sterling was knocked lower after the central bank announced that monetary policy would be left unchanged.

Sterling

Sterling traded lower after the Bank of England decided to leave its monetary policy unchanged. The announcement came on the back of industrial and manufacturing output data that was better than the consensus forecast. The economic data that is scheduled for release today in the UK may continue to support the view that the central bank needs to raise rates. Typically a strong inflation figure would be supportive for a local currency, but in this case, sterling could trade lower.

US Dollar

Two opposing forces continue to drive the dollar. A weaker euro on the back of the renewed fears over the European debt crisis has pushed the dollar higher, but higher oil prices in the wake of unrest in the Middle East and North Africa has helped to keep any dollar gains capped. The two stories will continue to drive currency markets, while economic data becomes an after thought that needs to be dealt with at a later time.

Euro

The euro got off to a weak start after Moody’s downgraded Spain’s sovereign debt rating. The downgrade comes just days after Greek debt received the same treatment. The two downgrades have brought attention back onto Europe’s debt crisis as leaders gather this weekend to try to hammer out details of an agreement that will solve the crisis.

Japanese Yen

The Japanese yen managed to move slightly higher in the overnight session. The yen was encouraged by Chinese inflation figures which came in steady, but the gains could be short-lived as political uncertainty becomes a greater factor for the yen.

Travelex Global Business Payments Malta, free phone: 800 733 22, www.travelex.com/mt/

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.