Sterling hit a 2 week high against the US dollar and is set to test the highest levels for over a year if inflation figures today come in higher than expected. UK CPI is expected to grow to 4.2% in February, up from 4.0% in January and nearly double the Bank of England’s target level of 2.5%. This further supports the case for an interest rate hike and as such, sterling has performed well against both the US dollar and euro. Markets are likely to wait until Wednesday’s Budget and Bank of England minutes before making a full assessment of the UK’s interest rate expectations so call in now for a live exchange rate.

In the euro zone, the euro hit a 4 ½ month high against the US dollar yesterday, breaking above $1.42/€1 after further comments from key ECB policymakers suggested the European Central Bank will target an interest rate hike as early as next month. ECB President Trichet spoke yesterday and reaffirmed his views from the last meeting, which were that inflation is at a level that requires an interest hike. Call in now for a live exchange rate.

In the USA, data showed that existing home sales fell by far more than had been expected. The US housing recovery is likely to be a long, drawn out process and as such these figures do not help things. Out today, one of the Federal Reserve policymakers speaks in Dallas which could see some volatility.

Elsewhere, positive news from the Japanese nuclear reactors saw investors return to riskier, higher yielding assets. In addition, fears over another large scale intervention by the G7 nations or even the Bank of Japan on its own has kept the yen away from all-time highs. Call in now for a live exchange rate.

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