Growing concerns about Greece’s future in Europe’s common currency bloc, and the effect that they are having on other indebted nations such as Spain, piled even more pressure on global markets. Stocks slid and the euro plunged to new lows as the ongoing flight into safer assets then moved up a gear after eurozone leaders missed another opportunity to put a floor underneath the crisis at an informal summit.

Sterling

The pound sank to fresh two-month lows against the US dollar and three-month troughs versus the Japanese yen minutes after the Bank of England’s recent policy meeting struck a tone that was more dovish than expected while revised data revealed the UK economy shrank more than expected in the first quarter. The shaky outlook for the British economy then turned even more uncertain after it emerged that retail sales in the UK fell at their fastest pace in two years in April.

US dollar

Risk-averse investors bid the US dollar to September 2010 highs against a currency basket, a rally assisted further by solid data on the US housing market. Both existing home sales and new home purchases rose more than three per cent in April, hopeful signs that the long-struggling sector may be near a bottom.

Euro

Another meeting among eurozone leaders turned up the heat on the shared currency. After it emerged that officials had already begun looking into a Greek exit, but still did not know how best to deal with the fallout, the euro tumbled to near two-year lows versus the US dollar.

Japanese yen

The Japanese yen fell sharply against its US counterpart after rating agency Fitch, concerned by Japan’s fiscal consolidation plans, lowered the nation’s creditworthiness. However, the yen soon regained its poise and clocked new highs against the euro and British pound after the Bank of Japan refrained from introducing more stimulus to increase both growth and inflation following its monetary policy meeting.