The Sterling gains against the Dollar as BOE inflation report will show an incre

The pound gained for a fifth day against the dollar amid speculation this week’s Bank of England quarterly inflation report will show consumer-price growth picked up, making an interest-rate cut less likely. The pound climbed to the highest level in three weeks after Barclays Plc said today earnings rose in the second half. The Bank of England is scheduled meet on Feb the 11th to release its inflation report containing forecasts for economic growth. Futures traders reduced bets the currency will drop against the dollar, data from the Washington-based Commodity Futures Trading Commission showed last week. “The pound has rebounded sharply because of improvement in sentiment toward the financial sector, and that was highlighted again today by Barclays’s earnings” said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi Ltd. The GBP/USD is currently trading at $1.4870 as of 8:30am, GMT.

The euro fell against the dollar and the yen after Russian banks asked the government to moderate talks with foreign creditors on $400 billion of loans, adding to speculation financial turmoil in Europe is worsening. The dollar strengthened on optimism U.S. President Barack Obama’s stimulus and bank-rescue packages will spur growth in the world’s largest economy. “European banks may face more financial difficulties” given news “that Russian banks may negotiate a debt rescheduling,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank by market value. “This is likely to cause risk aversion. It is natural that the euro is sold and the yen is bought.” The EUR/USD is currently trading at $1.2920 as of 8:38am, GMT.

Some Group of Seven nations may raise the issue of exchange rates at a weekend meeting in Rome, a senior official at Japan's finance ministry said, although he offered few clues on whether Tokyo will complain about the damage a strong yen is doing to its export-reliant economy. G7 finance leaders will agree to act promptly to support economies hurt by the global financial turmoil, and fiscal sustainability will also be debated as they have become more alert to the issue of unwinding huge spending plans, he said. "They won't say it out loud when they are striving to stimulate their economies, but each country is becoming very conscious about how to exit these policies," the official told reporters. The USD/JPY is currently trading at 91.36 as of 8:45am, GMT.

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