It was certainly a day to forget for the pound as it eased back from previous 2009 highs against both the dollar and the euro. Elsewhere, the dollar weakened against both the euro and the yen as a lower than expected rise in US inflation fuelled growing optimism about a global recovery and furthermore led to investors moving away from the dollar as a safe haven.

Sterling

The pound struggled and relinquished its grasp of a seven-month high against the dollar and the euro. Traders readily took profit on the back of recent gains and concentrated on the Bank of England's May MPC meeting minutes which failed to convince investors that an economic recovery has set in, despite encouraging signs.

US Dollar

The dollar fell against both the euro and the yen but clawed back losses suffered recently against the pound. News of an unexpectedly small rise in US inflation renewed hopes that a global recovery was under way, therefore slashing demand for dollars as a safe haven.

Euro

The euro recovered recent losses against the pound, moving from a seven-month low. The single currency was supported by an adjusted external trade surplus increase in April as the year-on-year plunge in exports was marginally smaller than in imports. The data was enough to lift the euro from its 2009 lows against the British pound as well as post gains against a number of major currencies.

Japanese Yen

There was more reason for cheer from the world's second largest economy as a Reuters tankan poll showed Japanese manufacturers have grown more optimistic about business in the last month. The poll's findings are in line with the Bank of Japan's views that the worst of the recession gripping Japan is over and this contributed to the yen strengthening.