Daily currency report

The dollar was the biggest loser mainly against the euro which overshadowed sterling's further weakness, after slowing UK growth data prompted speculation about further rate cuts. January's lower than expected durable goods data and the dropping new home sales was the main catalyst for the dollar weakness. Elsewhere, the yen strengthened as Asian stocks fell for the first time this month.

GBP

The pound strengthened against the dollar and held firm against the euro after Britain's economy grew by 0.6 per cent in the fourth quarter. This is unlikely to change the expectations that the Bank of England will cut interest rates at a gradual pace and not as aggressive as the US.

USD

The dollar extended its losses further against a basket of currencies, reaching another record low versus the euro. Continued weakness in US economic reports and further pricing in of additional FOMC rate cuts prompted the renewed selling in the greenback. Fed chairman Ben Bernanke again gave a sombre assessment of the US economy raising market expectations of more policy easing in the coming months.

EUR

The euro held firm against the sterling while strengthening against the dollar after German import prices increased more than expected in January printing 0.8 versus an expected 0.3 per cent, pushing the year-over year rate to 5.2 per cent, the highest since August 2006. The increase is not entirely surprising as rising oil prices have inflated costs worldwide.

JPY

The yen rose against 14 of the 16 most active currencies as Asian stocks fell for the first time this week, encouraging investors to reduce carry trades holdings, gaining the most against the South African rand and the New Zealand dollar. The euro declined against the yen and fell from a record high against the dollar as European stocks also dropped.