Sterling ended the week up against all the other major currencies while the Japanese Tankan survey revealed a surprise drop in business confidence. While this is only a four-day week, the economic calendar is nevertheless a busy one.

GBP

The sterling steadied against the euro and the yen, but fell versus the dollar after stronger than expected US data. The captured UK soldiers situation seemed to have improved and the progression of this geopolitical risk could play a big role in the fluctuations of the GBP. Following last month's majority vote in favour of keeping interest rates on hold at 5.25 per cent, most investors believe that the MPC will hold them at the same level again.

USD

The dollar had a mixed session with economic data providing a degree of support for the currency before an announcement from the US government, that it will impose duties on imports of subsidised goods from China, led to a heavy sell-off of the greenback. However, due to positive manufacturing survey and core inflation the Fed is unlikely to cut interest rates in near future.

EUR

Following an early sell-off, the single currency recovered, primarily as a direct consequence of US weakness. With no major surprises in Eurozone data, everybody is looking to this week with Eurozone PMI indexes, due for release, along with regional PPI, retail sales and German industrial production.

JPY

Japan's quarterly Tankan survey revealed that business confidence deteriorated for the first time in a year. However, it revealed that companies have planned a year of solid capital spending, and this could potentially spark solid economic growth.