Sterling plummeted to an eight-and-a-half month low against the dollar as qualms over the eurozone's sovereign debt issues boosted the appeal of the greenback as a safe-haven currency. These anxieties over the debt problems in the eurozone have extended beyond Greece to Portugal and Spain, hitting riskier assets. As a result the pound has been falling in tandem with the euro against the dollar.

Sterling

The pound has suffered heavily in the wake of the Bank of England policy meeting. The UK economy remained sluggish, having barely escaped the claws of recession by rising 0.1 per cent in the fourth quarter, and crucially the Bank of England is nowhere near contemplating exiting quantitative easing. The pound fell sharply against the dollar, partly due to position adjustment, marking its lowest weekly fall since late September 2009.

US dollar

The dollar was indeed the main victor as rising investor risk aversion re-entered the market. Fiscal concerns in some eurozone countries enhanced the appeal of the safe-haven currency and sent the dollar to a nine-month high against the euro and furthermore, an eight-and-a-half month high against sterling.

Euro

The euro's recent plight against the dollar was compounded by the fact that Germany's industrial production slumped in December. This added further worries about the pace of recovery in Europe's largest economy. Seasonally adjusted industrial production fell by 2.6 per cent in December from the previous month reported the Federal Ministry of Economics and Technology in Berlin.

Japanese yen

The yen gained as persistent worries about the eurozone's fiscal stability pushed investors further away from risky assets. The contagion, seemingly spreading throughout Europe, has certainly weighed heavily on the eurozone. The yen, as a result, hit a one-year high against the euro.