The US dollar lost ground against the pound but was able to hold on to earlier gains against the other major currencies despite weaker than expected trade balance figures.

GBP
CPI data saw the sterling rally against the majors, bouncing back from the recent lows after above forecast UK inflation data bolstered the likelihood of a Bank of England interest rate rise in November.

USD
The US trade deficit widened by more than had been expected in July. The record deficit was partly attributed to higher oil costs for the month. Surprisingly, the greenback remained near five-month highs against the Japanese yen and climbed to a two-month high against the Swiss franc.

EUR
The single currency was sidelined with no data of any real significance released. Instead, traders are biding their time before tomorrow's key release of eurozone CPI for August.

JPY
Japanese wholesale prices continued to rise at the fastest annual pace in more than 25 years during August, which indicated that inflationary pressure is gradually building, partly as a result of high oil prices. However, the data is unlikely to provide any support for a further hike in interest rates by the BoJ this year.

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