Daily currency report

Sterling brushed off further attempts to take it lower as it steadied after sharp losses from the previous day, but the prospect of a hung Parliament continued to weigh heavily on the UK currency. The euro also came under pressure as it dipped to a nine-and-a-half-month low against the dollar as fresh unrest over anticipated Greek austerity measures. Elsewhere yesterday the Australian dollar broadly strengthened after the central bank resumed raising interest rates; the increase was by 25 basis points to four per cent. The Swiss franc also strengthened broadly as GDP data showed economic growth accelerated more than economists forecast in the fourth quarter as exports helped the recovery gain traction.

Sterling

The pound continued to struggle across the board as the prospect of a hung Parliament after an election expected in May continues to raise concerns about whether Britain's ballooning budget deficit would be dealt with effectively. The Conservatives claimed that a victory for the Labour Party would tip sterling into a "downward spiral" and push the cost of borrowing higher; these comments triggered a fresh bout of sterling selling.

US dollar

The dollar held steady near a 10-month peak against the beleaguered British pound and briefly touched on a new nine-and-the-half-month high against the euro. With the absence of first tier economical data in the US the dollar continued to benefit from its safe-haven appeal.

Euro

The euro rose from its lowest level against the dollar since May 2009 after the Greek government said it would announce new deficit cuts, increasing speculation that a solution to its debt crisis may be imminent. It is expected that the Greek government will announce as much as €4.8 billion of additional deficit cuts ahead of a March 16 deadline, bowing to pressure from the European Union and investors to do more to tame the region's biggest shortfall.

Japanese yen

The yen touched it highest level in more than two months against the dollar as investors dumped long positions against other currencies that had built up to levels not seen in more than a year.