Daily currency report

The sterling rose against a broadly weaker dollar after investors took the rapid increase in oil prices, coupled with ongoing worries about the health of the US financial sector, as a cue to dump the US currency. However, the main story was the jump in oil prices driven by rising tensions between the US the world's largest energy consumer and energy rich Russia.

Sterling (GBP)

The pound climbed against a weaker dollar, but fell against the euro after a government report showed UK retail sales rose by the weakest annual rate in 17 months last month, strengthening the case for lower interest rates.

US Dollar (USD)

The dollar pulled back from its recent highs as fresh worries emerged over the health of the US financial system. The dollar's decline was driven by speculation that further write downs at financial firms and an increase in crude oil prices will prolong the US economic slowdown.

Euro (EUR)

The euro strengthened against the weakening dollar and pound. Even though PMI figures were disappointing, they were still in line with expectations. Still the euro found little support from comments by soon-to-retire European Central Bank policymaker Klaus Liebscher who claimed eurozone growth is expected to come in at the bottom end of expectations this year but an all-out recession in the region is highly unlikely.

Japanese Yen (JPY)

The yen rose rapidly versus the dollar, euro and Australian dollar after the Financial Times reported Lehman Brothers Holdings Inc. failed to sell a 50 per cent stake, prompting investors to reduce holdings of higher-yielding assets funded in Japan.