The main question for the FX markets is whether the Fed has paused for the time being on its current policy of raising US interest rates. US data out this week will be very closely watched and will give a much clearer picture of the Fed's interest rate policy over the coming months.

GBP
The sterling rose one per cent against the dollar as a result of declining expectations of US rate rises and strong UK data. It rallied even further against the dollar on the back of an unexpected upward revision of final GDP data for the first quarter and a positive consumer confidence survey.

USD
The dollar regained its footing after receiving a battering last week, when tame US inflation data stirred expectations that the Federal Reserve may have arrived at the end of its two-year campaign of tightening monetary policy.

EUR
The euro hit a three-week high against the dollar, as investors focused prospects for faster eurozone rate hikes after the Fed signaled a pause in its long monetary tightening campaign.

JPY
The yen hit a three-week high against the dollar after a survey of corporate sentiment strengthened a conviction among trades that the BOJ may raise interest rates from zero as early as next week.

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