Daily currency report

The Federal Reserve's half per cent rate cut continued to reverberate around the markets pushing the pound to a 2008-high against the greenback. However, the pound later slipped back due to poor UK home values. Elsewhere, expectations of an interest rate hike appear to have been cemented in Europe with the news that core inflation now stands at over three per cent, way above the European Central Bank's two per cent target.

GBP

The sterling dipped against the dollar as a Nationwide survey showed that house prices fell for the third consecutive month. Prices declined 0.1 per cent from December, bringing the annual rate of increase down to 4.2 per cent.

USD

The dollar fell against the yen after a report showed the biggest rise in weekly US jobless claims in 27 months from 306k to 375k. Along with the half-percentage point rate cut by the Fed, the news touched a nerve in the market and added to concern that a recession in the US is now inevitable .

EUR

The euro posted gains across the board as official data showed that eurozone inflation surged to a new record in January at 3.2 per cent. The rate is much higher than the ECB's target of two per cent, prompting many investors to price in an interest rate hike when the ECB convenes on February 7.

JPY

January saw the yen post its biggest gain against the USD since August 2001, increasing by over five per cent, as losses from global stocks prompted investors to return to carry trades.