The pound rallied against both the euro and the US dollar after higher than expected wholesale price inflation prompted speculation that the Bank of England may not be able to cut interest rates when it meets again next month. The sterling also received an unexpected boost from the banking sector, as the Q1 results from HSBC came in better than expected.

Sterling (GBP)

The sterling is under pressure, with gains posted already wiped out, after data released disappointed financial markets. April's producer prices data was the initial catalyst for the pound's improvement. However, the Bank of England's dilemma was underlined overnight as a survey from the Royal Institute of Chartered Surveyors (RICS) revealed that house prices fell at their fastest pace since 1978 during April.

US Dollar (USD)

In the absence of any key data, the US dollar traded within recent ranges, although it did end the day slightly down against the pound.

Euro (EUR)

The single currency recouped all the losses versus the pound, as disappointing UK data prompted fresh concerns over the state of the British economy.

Japanese Yen (JPY)

Comments from the governor of the Bank of Japan, Masaaki Shirakawa, cemented the view that interest rates in the world's second largest economy are likely to remain at 0.5 per cent for the rest of the year. Mr Shirakawa was speaking publicly for the first time since the Bank of Japan cut its growth forecast for this year. Mr Shirakawa pointed to economic weakness brought about by the spiralling cost of oil as well as a drop in consumer demand worldwide as the main reasons for revising the forecasts downwards.