Daily currency report

The US dollar came under sustained pressure as markets brace themselves for the latest round of monetary easing as the US Federal Reserve concludes its two-day policy meeting. US interest rates currently stand at one per cent, and expectations are that the cost of borrowing will be cut by as much as 75 basis points, although consensus forecasts are that a half point cut is more likely.

Sterling

The sterling hit a record low against the euro as the prospect of further interest rate cuts from the Bank of England left investors with little desire to invest in the sterling. The pound was later able to recoup against the single currency, although analysts have cited profit-taking as the key driver behind the pound's rise as opposed to any underlying support for the sterling.

US Dollar

Traders dumped the greenback in the wake of grim economic data and the prospect of yet another rate cut. Traders were also spooked by the news of an alleged $50 billion fraud committed by US trader Bernard Madoff, which has now been placed into liquidation by the US authorities.

Euro

The single currency continues to benefit from broad-based dollar weakness rising to a two-month low against the greenback and also hitting a record high against the sterling. These gains were later given up against the pound, although the euro's yield advantage over the two currencies is likely to keep the euro well supported in the short-term.

Japanese yen

The parlous state of the world's second largest economy was underlined as the Tankan survey revealed that Japanese business sentiment suffered its sharpest fall since the 1970s.