Sterling rose to a six-month high versus the euro while the US dollar has managed to hold onto most of its gains, seeing renewed interest by investors seeking a safe haven currency as fears over a double dip in the global economy grew.

Sterling

Sterling rose to a six-month high versus the euro, as the single currency remained pressured by concerns over the strength of the eurozone economy. Accordingly this waning risk appetite has seen the pound take a tumble against the bolstered greenback, strengthened by safe haven flows.

US dollar

The dollar strengthened against a basket of currencies, as concerns about the global economy shifted the spotlight off the greenback and triggered a rally in defensive currencies. The greenback had fallen sharply to six month lows in recent weeks as a string of soft US indicators raised fears about a double-dip recession. However, discouraging reports from Japan, China and the euro one suggested the US will not be the only major economy to experience slower growth in the months ahead.

Euro

The euro came under continuous pressure as risk aversion led investors out of the riskier single currency. Although German economy grew by 2.2 per cent in the three months to the end of June, its fastest quarterly growth in more than 20 years, the data was quickly contrasted to the 1.5 per cent contraction in Greece, leaving investors fretting that the two speed eurozone economy could continue to present a challenge to EU policy makers.

Japanese yen

The yen hit a 15-year high against the US dollar, adding to worries about the impact the strong yen will continue to have on exporters. Japan has said it is monitoring a rise in the value of the yen, but has declined to comment on talk that it will intervene in currency markets.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/