The dollar strengthened against a basket of currencies towards the end of last week, after the Federal Reserve underlined its anti-inflationary credentials. Elsewhere, the euro weakened, due to signs of a slowing eurozone economy, even as the region's inflation rose back to record highs.

Sterling (GBP)

The sterling hit a three-week high against a pressured euro on Friday, with the single European currency hurt by soft eurozone data and a broad-based recovery in the dollar. However, the domestic environment for the pound remains weak after consumer confidence fell to its lowest level since 1990, while figures from Thursday showed a record fall in UK house prices.

US Dollar (USD)

The dollar staged a rally last week on the back of upwardly revised GDP figures, upbeat comments and lower energy prices. The dip in oil price is good news for business and consumer spending, thus helping to prop up the dollar. The dollar finished the week 1.5 per cent up against the euro, 0.40 per cent up against the pound, and an impressive three-month high against the yen.

Euro (EUR)

The euro dropped significantly last week against the dollar, posting its biggest weekly percentage fall against the greenback in three months. However, the European Central Bank is clear on its obligation to "keep prices stable", ECB President Jean-Claude Trichet claimed in an interview.

Japanese Yen (JPY)

The yen lost ground across the board, as a solid performance from global equities boosted risk appetite and weighed on demand for the low-yielding Japanese currency. According to one senior currency strategist "the yen gains only when investors reduce risky positions" and the only concern at the moment is the British mortgage market, thus investors are once again investing in the carry trades.