Daily currency report

The sterling is under pressure yet again as a combination of weak housing data, poor retail sales and declining wholesale inflation data has prompted speculation that more interest rate cuts are on the way over the next few months. Elsewhere, there was also bad data out in the eurozone, although investors clearly believe that the 15-member bloc is better placed to withstand the worst effects of the global financial crisis and therefore the euro fared somewhat better than its British counterpart.

Sterling (GBP)

Pressure on the pound continued to build as weak economic data kept the sterling pinned close to an all-time low against the euro and also down against the US dollar. The fall by one per cent of the PPI data, which was helped by the recent fall in oil prices, was welcomed by analysts as it indicates that inflationary pressures in the UK economy are beginning to retreat. Nevertheless, the data was sterling negative as it paves the way for the Bank of England to further slash interest rates.

US Dollar (USD)

The US dollar slipped back against the majority of major currencies as firmer global stocks and improving appetite for risk lured investors away from the relative safety of US government debt.

Euro (EUR)

The single currency posted gains across the board mainly as a consequence of renewed appetite for risk from investors. The improvement came in spite of weak economic data that served to confirm investors' concerns that the eurozone is in recession although perhaps not as severe a downturn as the UK and the US.

Japanese Yen (JPY)

The yen declined against the dollar and the euro as a rally in Asian shares improved investors' appetite for risk, reducing demand for the Japanese currency. The moves will provide some relief for Japan's key export industry, which has suffered as a result of a strong yen and dwindling global demand.