The sterling continues to trade in tight ranges against the US dollar and the euro, but going into the Bank of England's Monetary Policy Committee rate announcement, the pound has been able to push to the upper end of its range.

Sterling (GBP)

The Bank of England announces its interest rate decision with no expectations of a change in policy despite increasingly gloomy news in the economy. Inflation is running at its fastest pace since 1997. In any other circumstances, UK interest rates would be going up but with the slowing economy and fears of a British recession are growing and rates should therefore remain unchanged.

US Dollar (USD)

Another poor day on Wall Street kept the dollar in the spotlight, losing out mainly against the euro. Financial stocks were badly hit once again as the fallout from the ongoing credit crisis continues. The dollar recovered slightly late in trading but sentiment remains very fragile on continued worries about credit related losses and the economy in general.

Euro (EUR)

Jean-Claude Trichet gave testimony before the EU parliament saying for the first time that high energy and food prices are beginning to generate broader inflation pressures. The European Central Bank have repeatedly cautioned against letting high food and energy prices push up the price of finished goods and services as well as wage demand.

Japanese Yen (JPY)

Japanese annual wholesale inflation was higher than expected in June hitting a new 27-year high on surging oil and commodity prices adding to the pressure on firms already suffering from already dwindling profit margins. Rising costs have made the Bank of Japan more worried about the risk of an economic slowdown rather than a higher inflation rate, reinforcing the view they will keep interest rates hold for the time being.