Daily currency report

The pound fought back from the previous day's disappointing GDP release with upbeat comments from the Bank of England's Andrew Sentence offering the local currency some support. Delivering his first State of the Union address in Washington US President, Barack Obama called for an extension of tax incentives to encourage business growth. The President's comments helped the dollar benefit from improved sentiment and saw a pullback in safe haven flows which led to an increase in demand for higher yielding assets worldwide during the overnight session.

Sterling

Sterling rose against the majority of its major rivals as the pound was buoyed by positive comments early in the day from the Bank of England's Andrew Sentence. Speaking at the British Property Federation Conference in London, the policymaker voiced his opinion that keeping inflation around its two per cent target may become more difficult, further supporting the view that quantitative easing measures will be allowed to expire in coming weeks.

US Dollar

The dollar rose to a six month high against the euro and rose against the yen after the Federal Reserve confirmed it will stop buying mortgage backed securities in March, making US assets more attractive. The dollar also found strength as President Obama called for an extension of tax incentives worth $38bn over the next two years to encourage business growth.

Euro

The euro weakened across the board as ongoing concerns around Greece continued to weigh on the single currency. Greek government bonds saw sharp declines after their finance ministry denied a report that it had enlisted the help of Goldman Sachs to promote the sale of £20 billion worth of Greek bonds to China. Traders had hoped that major funding from China could help its budget crisis and the refusal of this claim saw the euro sold off against the majority of its rivals.

Japanese Yen

The yen fell for a second day against both the dollar and the euro after US President Obama's plans to spur growth in the world's biggest economy sparked demands for higher yielding assets and a withdrawal from the safe haven flows coming into the yen.