The pound hit 26-year highs in overnight trade but stopped just short of the 2.0200 level as speculation continued to mount that BoE will raise rates to 5.75% at the upcoming MPC meeting on Thursday.

Currency strategist Boris Schlossberg analyzes the major currencies for the week of July 2.

The TANKAN survey of large manufactures printed in line with expectations, but after a series of disappointing economic results from Japan last week, this news was viewed with relief as it boosted hope that BOJ may raise rates as early as August.

The unemployment rate in France hit a 25-year low and French consumer sentiment registered its best reading since the survey began helping to put a bid underneath the EUR/USD.

The surprisingly strong Nationwide house price survey for June helped drive cable above the 2.000 figure once again, as it suggested that the BoE will have no choice but to raise rates to 5.75% in July.

Yen strengthened for the second night in a row as mild carry trade liquidation continued and Japanese Retail trade data printed better than expected.

Buoyed by rising prices in the corporate service sector which hit a nine year high, the yen finally saw some unambiguous strength in the currency market with a number of factors contributing to its rally.

Currency strategist Boris Schlossberg analyzes the major currencies for the week of June 25.

The pound broke above the key 2.000 level for the first time in nearly two months in early London trade as the unit continued to attract speculative flows on the belief that BoE will raise rates at the upcoming MPC meeting in July.

The IFO survey of business sentiment declined sharply in June from 108.4 expected to 107.00.