The sterling reversed some of the previous sharp losses after UK inflation data came in higher than expected, and above the BoE's two per cent target. Elsewhere, the yen continued to be sold off following the BoJ's decision to leave interest rates unchanged at 0.5 per cent.

GBP

The sterling recovered strongly in the wake of unexpectedly high British inflation data that served to push expectations of a possible interest rate cut further into the future. Most analysts believe that with the price of energy and food still rising steadily, interest rates are unlikely to come down before February.

USD

The dollar weakened against the majors, resuming a long-term decline after a brief respite as the recent bout of profit-taking finally ran out of steam. Undermining the greenback is the expectation of further weakness in the housing market and persistent concerns that economic growth in Q3 is likely to have been heavily impacted. Bank of America became the latest financial institution to report heavy financial losses, writing-down $3bn worth of debt.

EUR

Lingering worries about the global effects of the US sub-prime housing market slump and the unprecedented Euro's strength left German investor confidence at 14-year lows in November. Concern is growing that economic growth in Germany's economy threatens to run out of steam as exporters suffer from a lack of competitiveness. Nevertheless, the euro remained well supported and recovered roughly half of Monday's losses versus the greenback.

JPY

The yen plunged across the board, after the BoJ kept interest rates on hold at 0.5%. BoJ President also said that he had no predetermined plan to increase the cost of borrowing in the near future.