The pound made significant gains against the dollar following comments from a BoE policy maker whilst the dollar itself struggled against sterling and the yen. Meanwhile, the euro remains vulnerable to the debt problems in Greece.

Pound Sterling – UK Markets

Sterling leapt to a nine-day high against the US dollar this morning following comments from BoE Monetary Policy Committee member Andrew Sentance, who said that the central bank was close to holding back to gauge the impact stimulus has had on the economy. A strong retail sales survey added to the pound’s gains as it traded comfortably at USD1.621 and EUR1.117 at 09:04 GMT.

US Dollar – US Markets

The dollar was little changed against the euro in early trading but fell significantly against the yen yesterday after the People's Bank of China increased the amount of reserves Chinese banks must hold in order to slow the growth of credit. At 0905 GMT the greenback traded at 0.616 against the pound and 0.689 against the euro. As the data flow hits a dry patch, trades are still being driven by last Friday’s US Non-Farm payrolls report. However, today's trading may be influenced by the release of the US Federal Budget Balance later on.

Euro – European Markets

The euro has been giving off mixed signals as the Greek sovereign debt once again looms over the single currency. In a statement, the Greek Finance Minister said the country had “emptied all the skeletons out from its closet” and this went some way towards supporting the euro, which currently sits at 0.894 versus the pound and 1.450 against the US dollar.

Other Currencies – Highlights

The yen made significant gains against the pound and the euro in overnight trading after China stepped up its restrictions on required Chinese bank reserves. At 0920 GMT the yen tested the pound at 147.81 and held the euro at 132.21.