Sterling fell victim to yet another sell-off as data showed that business investment dropped by far more than had been expected during the last three months of 2009. Elsewhere, the euro also came under pressure against the US dollar and Japanese yen after ratings agency, Standard and Poor's said it may further cut Greece's sovereign debt rating. There was also bad news in the States as an unexpected rise in new jobless claims added to the gloomy economic outlook.

Sterling

Traders aggressively sold the pound as disappointing business investment figures served to confirm investors' fears that the British economy remains in severe difficulty. Markets responded swiftly to the news that not only had business investment fallen for the 6th successive quarter, but that the decline had actually accelerated in the period between October and December 2009. By the close of session, sterling had fallen to a nine-month low against the US dollar, and had also lost significant ground against the euro. This latest set of bad news, combined with persistently weak numbers over the last two weeks has reignited fears that the UK could well slip back into recession this year.

US Dollar

The greenback benefited from safe haven trading as poor data from the UK and lingering concerns over the Greek debt crisis boosted the dollar's appeal across markets. Nevertheless, economic data released in the US was actually disappointing. Even though durable goods orders rose by 3 per cent in January, the news was overshadowed by the fact that new jobless claims jumped to their highest level since November.

Euro

The euro enjoyed a strong session against sterling, but fell back against the US dollar and Japanese yen, damaged by the news that Standard and Poor's is considering yet another downgrade of Greece's debt rating. The extent of the Greek debt crisis should not be underestimated - all the more so as it represents the Euro Zone's first real test.

Japanese Yen

It was another good session for the Japanese yen, which benefited hugely from its safe haven appeal.

Commercial Foreign Exchange Travelex Malta (Free phone: 800 733 22) www.travelex.com/mt/

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