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Sterling falls as UK inflation slows

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Pound Sterling

The Pound fell to a four-week low against the Euro as investors await the release of the latest policy meeting minutes from the Bank of England. Against the US Dollar, Sterling tumbled to its lowest level in more than six-weeks after data showed that UK inflation slowed more than economists had been predicting. The currency could find minor support today if the latest retail sales data shows that sales increased in April.

US Dollar

The ‘Greenback’ weakened against the Euro for a third consecutive day as investors raise their bets that Federal Reserve Chairman Ben Bernanke will tell congress that the pace of the Bank’s monetary stimulus programme should be maintained. Against the Pound the Dollar hit a seven week high after the UK’s weaker-than-expected inflation created a surge of Dollar buying.

The Euro

The Euro strengthened to a four-week high against the Pound and continued to climb against the US Dollar. Expectations that the Federal Reserve may maintain its current level of quantitative easing in spite of recent positive US data have caused the ‘Greenback’ to soften against the majority if its peers this week and the UK inflation data caused Sterling to fall.

The Euro was little affected by Vodafone’s declaration that ‘severe macroeconomic weakness’ across Southern Europe (particularly a slump in demand in Spain, Italy, Greece and Portugal) has been ‘very challenging’ and has hit the company hard.

Australian Dollar

The ‘Aussie’ is lower against the US Dollar due to the release of weaker-than-expected consumer sentiment data and a decline in commodity prices. The next movement for the currency depends on the outcome of Federal Reserve Chairman Ben Bernanke’s speech to Congress.

New Zealand Dollar

The ‘Kiwi’ edged lower against the US Dollar due to investors holding off from making any decisions ahead of Federal Reserve chairman Ben Bernanke's Congressional testimony, where he's expected to give his view on whether the US central bank will start slowing its quantitative easing programme.

Canadian Dollar

The ‘Loonie’ fell to a two-month low against the US Dollar due to speculation that the Federal Reserve will choose to reduce its quantitative easing measures. The currency fell against all of its most traded peers as crude oil declined for the first time in four days.

South African Rand

The Rand remains at a four-year low after investor fears over a renewed bout of violence in South Africa’s mining sector were realised. Several people were injured in violence at a chrome mine in the north of the country. Fears are also growing that worker unrest has spread to the manufacturing sector. Employees were ordered to return to work at a Mercedes-Benz factory after staging a wild cat strike over pay rises. Consumer price inflation due for release later today is expected to show a slight decline to 5.8% year-on-year.