Sterling, euro strengthen on data, comments

Story link: Sterling, euro strengthen on data, comments

The US dollar weakened after Federal Reserve chairman Ben Bernanke testified before Congress on Wednesday. Mr. Bernanke said that that the US economy would continue to grow, but at a slower pace than it had last year, and that pressures toward inflation were beginning to ease somewhat. The dollar was also hurt by new data showing retail sales flat in January. The dollar was 0.2 percent lower versus the yen, to �120.80, while it dropped 0.7 percent to $1.3130 in relation to the euro and was down 0.8 percent to $1.9620 against sterling.

Sterling, on the other hand, strengthened after the Bank of England issued its quarterly Inflation Report. The Bank said that inflation was likely to remain above the government�s 2 percent target if UK interest rates remain at their current level of 5.25 percent, implying that more rate hikes are to come. Also helping the UK currency was a report showing that unemployment was lower for the fourth month in a row in January. The UK currency added 0.1 percent to �0.6690 versus the euro, while it was 0.5 percent higher to �237.00 against the yen.

The euro also strengthened, adding 0.2 percent to SFr1.6285 in relation to the Swiss franc and was up 0.5 percent to �158.65. The shared currency was helped by a strong report of economic growth in the Eurozone, issued Tuesday, and by comments from a European Central Bank official that wage demands and energy prices carry the threat of inflation in the region.