The euro fell to six-week lows against the dollar on Friday and the pound hit a 23-year trough versus the U.S. unit as weak data and global economic concerns kept investors extremely wary of risk.
The UK and euro zone currencies fell to session lows after data showed the UK economy contracted by 1.5 percent in the fourth quarter, far more than analysts had expected and confirming a recession.
Investors took little encouragement from earlier surveys showing the euro zone manufacturing and services sector contracted at a slightly slower pace in January, since they remain deep in recessionary territory.
The yen jumped on the back of its perceived safe-haven status, hitting record highs against the pound and nearing seven-year highs against the euro as financial sector woes pushed European shares down over 2 percent to a six-year low .FTEU3.
"Equities have been drifting lower and risk aversion trades have pressured euro/dollar and cable (sterling/dollar) all morning, but now the weak data is also kicking in," Bank of Scotland Treasury Services currency strategist Naeem Wahid said.
"The (UK) GDP number is extremely weak at -1.5 percent," he said.
The euro fell 1.5 percent against the dollar to a six-week low of $1.2766, while the pound tumbled more than 2.5 percent on the day to hit another 23-year low of $1.3502.
This pushed the trade-weighted dollar index .DXY to a six-week high of 86.809.
The dollar was also supported by comments from U.S. Treasury Secretary nominee Timothy Geithner, who said a strong dollar is in the United States' interest.
His remarks came on Thursday when he won the Senate Finance Committee's backing to head the U.S. Treasury.
The yen enjoyed strong gains, with the dollar down 0.6 percent at 88.22 yen at 1100 GMT (6 a.m. EST), while the euro lost 2.0 percent 113.11 yen, close to a seven-year low just above 112 yen.
The pound also hit a record low against the yen of 118.87.
POUND TUMBLES
Sterling has come under severe pressure recently as worries about a very weak economy combined with concerns about the UK's troubled banking sector and the parlous state of government finances.
Further UK data on Friday showed an unexpected 1.6 percent monthly jump in retail sales, though a 2.6 percent drop in the annual deflator suggested that this rise came at the cost of hefty discounting.
