Sterling remained around a 13 month high against the US dollar yesterday as investors continued to sell the US dollar on speculation that US interest rates would stay in place much longer than the UK. In addition, stronger than expected construction sector activity helped boost prospects for the UK economy and many feel that the Bank of England will have no choice but to raise interest rates sooner rather than later if fundamental data improves as it has done this week. Today’s key data release is UK services sector activity which will give a good picture as to whether interest rates are likely to remain set to rise in June as many expect. Call in now for a live exchange rate.

In the euro zone, the euro traded around a 4 month high against the US dollar yesterday on expectations of interest rate hikes in the region. Recent comments by key policymakers in the region about monetary policy and high inflation mean that investors are expecting European Central Bank President Jean-Claude Trichet to step up his anti-inflationary rhetoric at today’s central bank interest rate meeting. However, given the relative strength of the euro, it could drop off following the meeting regardless of what happens as investors sell on the news – call in now for a live exchange rate.

In the USA, the US dollar continued its recent downward trend yesterday and even strong fundamental figures in the form of better than expected employment figures did not help. The US Federal Reserve remains in ‘dovish’ mode (i.e. loose monetary policy) which contrasts with the UK and Europe where there is talk of interest rate hikes. Out today there is further unemployment data, so ensure you speak to a trader sooner rather than later.

Elsewhere, the New Zealand dollar has had a very poor week, hurt by expectations of an easing of monetary policy by the central bank and concerns over the impact of the recent earthquake. Call in now for a live exchange rate.

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