Daily currency report

Sterling begins what could be a pivotal session on a strong footing as investors eagerly await the outcome of policy meetings from both the Bank of England and the European Central Bank. Markets have more or less priced in 50bp rate cuts from both Central Banks, but it is details of any quantitative easing measures either bank intends to take that is fuelling interest. Elsewhere, the US dollar proved to be the currency of choice for cautious investors who were troubled by yet more weak data from both the US and Europe.

Sterling

Sterling starts the session higher against both the US dollar and euro after data released showed that British consumer confidence rose from a reading of 41 to 43 in February. Separate figures showed a surprise rise in British services sector activity in February. The news gave hope that substantial cuts in interest rates may be helping to temper a deep slowdown in the economy as the easing of monetary policy finally filters through the economy as a whole.

US Dollar

The greenback was able to post multi month highs against both the euro and yen as another slide in private sector jobs data and persistent worries about the world economy boosted safe-haven flows into the US.

Euro

The euro slipped against the dollar and the yen as investors prepared for the European Central Bank to cut interest rates in an attempt to help the faltering eurozone economy. A rate cut of 50 basis points to 1.5 per cent is widely expected.

Japanese Yen

The yen came under considerable pressure especially from the USD as the extent of Japan's economic woes becomes more apparent, and confidence in the current administration to steer a course through these troubled waters continues to evaporate.