The pound was the best performer amongst the majors as stronger Consumer Price Index numbers and the takeover of Cadbury's by Kraft Foods gave the local currency the boost it needed. The euro lost ground against the pound and the dollar as lingering concerns regarding Greece's mounting debt and weaker than expected German investor sentiment continued to weigh on the single currency. While the dollar initially lost ground versus the pound, however, it managed to trim some of its losses later in the session as the outlook for Europe's economy discouraged demand for risk giving the dollar the opportunity to take advantage of its safe-haven appeal. In other news, the Reserve Bank of Canada kept its interest rates on hold at 0.25 per cent and indicated the interest rate will stay there at least till the second quarter of this year.

Sterling

The pound rose to a four-month high against the euro after stronger than expected UK inflation figures suggested the Bank of England may soon end quantitative easing and possibly raise interest rates earlier rather than later this year.

US Dollar

The dollar opened trading on the back foot, as stronger than anticipated economic data from the UK saw the dollar weaken against the British pound.. However, the eurozone's grim economic outlook meant investors were less willing to take on excessive risk and fled back into the perceived safe-haven dollar.

Euro

The euro plunged against both the pound and the dollar as German investor sentiment figures disappointed whilst continuing jitters about Greece's fiscal situation kept the heat on the single currency. The German ZEW sentiment index came in at 47.2 in January from 50.4 in December dropping for the fourth month in a row. The reading sparked further speculation that Germany's economic recovery may be losing momentum and that the euro has been overvalued in recent months.

Japanese Yen

The yen strengthened versus the euro as investors remained cautious as concerns with regards to the parlous state of Greek public finances continued to encourage risk aversion.

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