Daily currency report

The sterling suffered another difficult day, struggling again to make an impact in the wake of the announcement that the government intends to nationalise Northern Rock. Traders flocked to buy currencies with a high interest rate yield, consequently both the Aussie and Kiwi dollar posted strong performances, with the AUD hitting a three-month high versus the greenback.

GBP
The sterling remained mired closed to recent lows across the board as investors were downbeat about prospects for the UK economy and the health of the all-important banking sector. Markets have put a negative spin on the government's decision to bring Northern Rock under public ownership, with some analysts saying this would leave the government less room for manoeuvre when it comes to fighting an economic downturn.

USD
The dollar finished strongly against the major currencies. A spike in the price of US crude oil to over $100 initially caused investors to fret over the potentially detrimental impact this would have on economic growth. Consequently the dollar was sold off in anticipation of further rate cuts from the Federal Reserve.

EUR
The euro ended up against the pound and held steady versus the dollar as traders continued to back the European Central Bank to keep interest rates on hold for the foreseeable future. Comments from ECB governing council member Christian Noyer also helped to boost the euro, as he reiterated the Bank's commitment to fighting inflation.

JPY
There was little movement in the yen value as the minutes from January's Bank of Japan monetary policy meeting failed to shed any new light as to the thinking of the Central Bank. The policy board members said uncertainties in overseas economies are heightening, and, in particular, that downside risks in the US economy are growing.