The Bank of England and the European Central Bank will make a policy announcement, although a reduction in the cost of borrowing over in Europe is thought to be unlikely. Instead, investors are likely to focus on the post-announcement press conference by Jean-Claude Trichet, as traditionally Mr Trichet tends to drop heavy hints as to the Bank's future policy.

GBP

Sterling plummeted to a fresh all-time low versus the euro and a 10-month-low against the US dollar. This added to a sense that the credit crunch and inflation are starting to take its toll on the UK economy.

USD

The dollar rose, aided by speculation that the White House may offer tax breaks to help stimulate the economy, but also exploiting underlying weakness in the pound. Nevertheless, with many analysts convinced that the US is headed for a recession, any recovery in the greenback's value could prove to be short-lived.

EUR

The euro dropped against 12 of 16 most traded currencies as German industrial production, exports and retail sales unexpectedly declined, suggesting growth in Europe's largest economy is slowing. The European Central bank will announce its interest rate decision which is expected to be kept on hold at four per cent.

JPY

The Japanese currency gained the most against Sterling and the Australian dollar as investors cut so-called carry trades as concerns grow the global economy will cool. the upcoming meeting of finance ministers and central bankers will discuss achieving stability in the financial markets as well as high oil prices.