Daily currency report

The euro’s gains have been interrupted by a sovereign rating downgrade given to Greece by rating agency Moody’s.

Sterling

Sterling could see increased selling pressure after data showed weak consumer demand and the outlook for UK based banks remains in turmoil. The Bank of England’s Governor Mervyn King has insisted recently that banks separate their investment banking branches away from high-street operations. His vocal stance over the issue at a time when banks are already facing stricter regulatory measures is forcing some to consider whether or not to maintain their headquarters in the UK.

US dollar

Economic data showing consumer credit rose to $5.01 billion, which was above the downwardly revised $4.09 billion seen in the prior month had little to no impact on currency markets. The report showed that consumers failed to use credit cards as they continued to deleverage. The prior month’s report had seen credit card sales pick up, suggesting sentiment over the outlook for the economy was picking up.

Euro

Moody’s, a rating agency, downgraded Greece’s sovereign debt rating by three notches and left the door open for more downgrades. The decision was an ugly reminder to investors that the peripheral debt crisis has not disappeared.

Japanese yen

The Japanese yen is trading slightly lower after current account data showed exports to China slowing in front of the Chinese New Year. The economic data does not help the outlook for growth, but the yen’s downside should be somewhat protected as investors continue to view the currency as a safe haven and with unrest in the Middle East continuing, demand is not expected to disappear.

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