Daily currency report

The sterling made healthy gains against the dollar profiting from a broad sell-off in the US currency which was fuelled by data showing an unexpectedly large fall in February US consumer confidence. This increased concern that the Federal Reserve will struggle to avert a recession, and the beleaguered currency dipped dramatically against the euro posting its steepest loss in two weeks.

GBP

The pound faired well against the dollar benefiting primarily from negative US data and a u-turn in risk appetite by some traders. Even though it appears the sterling might make a bit of headway against the dollar this week, moving back above key levels, there is still concern about the UK financial sector, the economy and the housing markets, thus making it difficult for it to make progress against the euro.

USD

The dollar slumped against most major traded currencies as doubts about the overall US outlook put investors back in the "sell-dollar" mode. Worries resurfaced about the extent and depth of the economy's slowdown, this despite aggressive Fed efforts to boost liquidity in the financial system.

EUR

The euro held steady against most currencies and made impressive gains against the dollar, as the European Central Bank's Vice President Lucas Papademos commented on recent market volatility, stating that the ECB is watching currency markets very closely.

JPY

The yen rose against the euro on speculation that falling stocks will prompt investors to pare holdings of higher-yielding assets funded with loans in Japan. The currency also bounced back against the Australian and New Zealand dollars, two favourites for so-called carry trades.