The pound has fallen strongly after the newest member of the Bank of England’s Monetary Policy Committee, Martin Weale said the UK could head into recession once again. This triggered fears about Britain’s recovery especially as Mr Weale also expressed reservations about the Bank’s own predictions for economic growth for the rest of 2010 and into 2011. The euro dived to multi-month lows as markets continued to digest comments made by European Central Bank member, Axel Weber, in which he suggested a loose monetary policy is likely to last till year-end. This raised concerns about the eurozone’s own recovery causing traders to shun the single currency. With no meaningful economic data across the pond, the dollar proved to be a winner. The greenback rose to four week highs against the pound and six week highs against the euro. Fresh fears that the UK could slip back into recession and ongoing concerns about the state of eurozone economies saw risk aversion return to the market to the dollar’s benefit.

Sterling

The pound opened at four-week lows against the US dollar after Bank of England policymaker, Martin Weale said the UK may slide back into recession. His comments to The Times newspaper also indicated that the BoE’s growth predictions for this year and going into 2011 may be too optimistic.

US Dollar

The dollar reached its strongest level versus the euro in almost six weeks as reports showed US expansion decelerated while services and manufacturing growth in the 16-nation euro area slowed. The dollar remained buoyed by last week’s mainly negative data, including a contraction in manufacturing activity, which has spurred safe haven demand.

Euro

The euro fell against both the pound and the Japanese yen as comments from European Central Bank member, Axel Weber echoed throughout the trading session. This led investors to bet against the single currency bringing the euro under immense pressure.

Japanese Yen

The yen rose against all of its major counterparts as signs that the global economy is slowing boosted demand for Japan’s currency as a refuge. The yen touched a seven-week high against the euro after a conversation between Prime Minister, Naoto Kan and Bank of Japan Governor, Masaaki Shirakawa failed to live up to expectations.

Commercial Foreign Exchange Travelex Malta (Free phone: 800 733 22) www.travelex.com/mt/

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