The euro starts the week very much in the ascendancy, having hit an all time high against both the pound and the US dollar. Underpinning the euro's strength is the probability that interest rates in the euro-zone are likely to stay on hold or even rise in the foreseeable future, in contrast to both the US and the UK, where a deteriorating economic outlook has put pressure on the Central Banks alike to ease monetary policy.

GBP
The sterling slumped to an all-time-low against the euro and also slipped against the dollar as sagging consumer sentiment and falling house prices boosted expectations that the Bank of England will soon be obliged to cut interest rates again.

USD
The greenback began this month at a three-year-low against the yen and also mired close to an all time low versus the euro as the economic outlook in the world's largest economy continues to deteriorate. Indeed, rather than inflation, it is stagflation that actually threatens to derail the US economy.

EUR
The euro stands at record levels versus the dollar and sterling as the market shrugged off the fall in economic sentiment, preferring instead to focus on the release of inflation data for last month. Investors are still bidding up the euro in the belief that interest rates are set to at least stay on hold for the foreseeable future, whilst rates in the UK and the US will most probably tumble.

JPY
The yen rose to begin the week at a 3-year high versus the dollar. Propelling the yen higher were fears about the US economy that saw Asian stock markets slump and prompted a rapid unwinding of carry trade positions.