The sterling fell across the board as UK retail Sales revealed an unexpected fall of 0.4 per cent on the month. Elsewhere, ECB council member, Nout Wellink, claimed that the eurozone may experience slower growth than policy members had expected.

GBP

The sterling lost ground against both the euro and the dollar as an unexpected fall in Retail Sales cemented the case for further interest rate cuts to attempt to ignite growth in the economy. The data served the purpose of reinforcing expectations that there will be at least one per cent worth of interest rate cuts from the current 5.5 per cent, with the first likely to occur next month.

USD

The dollar rose broadly and ultimately hit a one-month high against the euro as investors fretted whether major economies would be able to decouple from the slowing US economy. The euro was hit primarily due to traders taking short covering positions in the dollar based on ongoing concerns that the eurozone economies may weaken more than expected this year.

EUR

The euro fell last week to five-month-low against the yen and a three-week-low against the dollar after Wellink stated that economic growth may slow more than policy members had expected.

JPY

The yen is due for an interesting week ahead with key economic releases expected in the form of the BoJ's interest rate decision followed by key inflation figures. Although the BoJ are likely to keep interest rates on hold, the accompanying statement will be watched with interest to see how rising oil prices and the global credit crunch is affecting the Japanese economy.