The sterling had been sold off aggressively in the wake of the Northern Rock problems, however, with other economic data pointing to underlying strength in the economy, and with the government agreeing to guarantee all deposits, investors felt more positive about rebuilding long sterling positions.

GBP
The sterling recovered from a one-year low against a basket of different currencies as sentiment amongst traders began to change, and investors felt more confident about backing the pound again. This came in spite of data that revealed a much higher than expected budget deficit. Early trading has also brought more bad news to UK markets, with the Independent newspaper reporting that the UK's deposit protection plan needs cash to cope with a run on deposits at Northern Rock. The Independent claims that the Financial Services Compensation Scheme has only £4.4 million to protect deposits, compared with $49 billion at a similar fund in the US.

USD
The dollar's slide may continue amid fears that a deepening housing slump could hurt growth and prompt the Fed to follow last week's 50bp rate cut with a renewed easing of monetary policy. This would in turn further erode the greenback's yield advantage over other currencies.

EUR
The eurozone's July industrial new orders fell by more than expected from June as concern continues to grow among member states that the strong euro may negatively impact growth. Furthermore, this data only refers to the period prior to the global credit crunch, and since then the single currency has strengthened further across the board.

JPY
Japan's Yasuo Fakuda won the key parliamentary vote to be the next prime minister, succeeding Shinzo Abe, who resigned abruptly on September12. Mr Fakuda is viewed as a moderate conservative who should take a more consensual approach to government than Mr Abe.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/