Sterling faced heavy selling pressure as the political and economic stability of Britain remained uncertain. Sterling slumped to 11-month lows against a basket of currencies as industrial output and trade balance figures came in below forecast. More political instability within the eurozone has allowed the single currency to be weighed down especially against the US dollar, as uncertainty into Greece's fiscal health has kept trade into the euro fairly thin.

Sterling

Sterling continued to decline, slumping to 11-month lows against a basket of currencies as fears surrounding the outlook for the UK economy remained strong. With political uncertainties, abysmal public finance figures and a succession of downbeat data, sterling remained vulnerable to heavy selling pressure. Fears surrounding the possibility of a hung Parliament, and the effect that this would have on policy making in the midst of arguably the worst recession to hit Britain in half a century, continued to make sterling an unattractive prospect to investors.

US dollar

A quiet week in the US saw the greenback trade largely on sentiment shifts and equity market movements. After falling overnight, the US dollar pared some of its losses following unexpectedly high US retail sales figures, rising to 0.3 per cent against a forecast of -0.2 per cent. The greenback rose off the back of this news, by supporting the belief that the already strong US economic recovery is continuing to remain stable.

Euro

Developments in Greece remained at the forefront of investors minds, as Greece's PM was seen courting the media to gain support for Greece's austerity measures and campaign for stricter rules governing speculative trade. This campaign for confidence was somewhat undermined by Moody's and Fitch's rating agencies highlighted Spain, Portugal and Greece's continuing vulnerability to a sovereign downgrading.

Japanese yen

Mixed sentiment saw the Japanese yen oscillate between safe haven strength and heavy selling pressure bred from speculation surrounding the immanency of the Bank of Japan market intervention. While weak Japanese machinery orders, strong Chinese growth and inflation data and year-end reparation flows all helped lift the safe haven yen; continuing speculation into the BoJ's readiness to intervene into currency markets has kept investors cautious into ploughing into the yen while such uncertainty remains.

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