Pound drops against disappointing industrial output

An unexpected fall in industrial output in January has seen sterling weaken to $1.4832, the lowest level for the pound against the dollar since June 2010. The British currency also hit A$1.4370, its lowest point against the Aussie since 1985. In a note ANZ pointed to a lack of fresh initiatives and a lack of ability to ease fiscal policy at the Bank of England.

The euro has managed to remain steady even though Jens Weidman, Bundesbank chief, warned earlier in the week that the crisis in the eurozone had not yet come to an end. The single currency is currently hovering around $1.3027.

Investors and analysts are now looking to bond sales in Spain and Italy later that will give more of an indication of the level of anxiety surrounding the blocs more heavily indebted nations.

Following a rise to 96.71 yen yesterday the dollar has shed 0.2 per cent to hit 95.90 yen. The euro is also down against the Japanese currency to 125.90 yen, a loss of 0.1 per cent. The yen is being kept under pressure because of expectations that a leadership change at the Bank of Japan will usher in bolder monetary easing policies.

The Aussie dollar appears to have attracted investors as the Reserve Bank of Australia seems to be in no hurry to slash interest rates and ended up by 0.1 per cent to $1.0327.