Sterling went down against its major rivals as inflation data provided little hope of a short-term interest rate hike. The euro benefited from Ireland’s government bond auction which helped raise €1.5 billion.

Sterling

UK’s Consumer Price Index (CPI) figures for July showed an annual fall from 3.2 per cent to 3.1 per cent in July. Despite the drop, sterling managed to shrug off any potential losses. Hopes of a short term increase in UK interest rates were quashed, pushing sterling down across the board.

US dollar

The greenback’s safe haven appeal diminished as signs of economic slowdown encouraged interested parties to turn to the Japanese yen instead. Furthermore, a successful bond auction in Ireland allowed room for risk pushing investors to take positions out of the US dollar and into the euro. The tide quickly turned with the release of poor US data which triggered risk aversion and consequently increased the dollar’s appeal as a safer asset.

Euro

The single currency made significant gains against sterling in particular. Economists shrugged off the disappointing outcome of the German ZEW economic sentiment index which showed a fall from 21 to 14 in August and instead, focused on the successful bond auction received in Ireland. The debt-ridden economy managed to sell an impressive €1.5 billion worth of government bonds which encouraged investors to take out longer term positions in the riskier European currency.

Japanese yen

The Japanese currency benefited greatly from global economic growth concerns allowing the yen to move to six-week highs against its European counterpart. The feeling that momentum in the United States is slowing pushed the yen to near 15-year highs against its US rival, leaving investors to ponder the extent of potential gains still to come.