The Confederation of British Industry reported a disappointing retail sales figure which further highlights the precarious position the Bank of England finds itself in, juggling between sky high inflation and fragile economic growth. Consequently, the pound tumbled broadly heading towards monthly lows against the euro, yen and Swiss franc. The euro continued its upward march buoyed by solid economic fundamentals and more hawkish rhetoric from the European Central Bank. Investors remain extremely nervous with ongoing revolutions in oil producing nations such as Libya expected to escalate. Should fuel prices rocket, US consumers would be hit the hardest according to many analysts and those concerns helped facilitate the greenback’s fall to an all time record low against the safe haven Swiss franc. Higher oil and commodity prices finally lent support to the currency of resource rich Canada, known as the “loonie” along with the Australian dollar. The “Aussie buck” also reached a record high against its New Zealand counterpart as investors consider the possibility of the Reserve Bank of New Zealand cutting interest rates in the wake of the recent earthquake disaster.

Sterling

The pound fell broadly, tumbling towards one-month lows against the euro, Japanese yen and Swiss franc. The move came after the Confederation of British Industry reported a far smaller increase in retail sales on the month to February than was widely expected.

US dollar

Although Saudi Arabia attempted to calm investors by stating that they can help ease oil supply disruptions, its price remains elevated and markets fear that a sharp increase in energy costs could potentially derail the US economic recovery.

Euro

The euro continued its upward march buoyed by solid economic fundamentals and more hawkish rhetoric from the European Central Bank. Germany, the main driver of growth within the area, posted a healthy four per cent annual growth in Q4 2010 driven by its impressive export markets. Reports also revealed that eurozone economic sentiment rose to over three-year highs with inflation expectations also picking up.

Japanese yen

The yen posted fresh multi-week highs against several rivals including the dollar and pound as investors continue to seek refuge from turmoil in the Middle East and North Africa.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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