Falling stock markets and the prospect of further interest rate cuts prompted traders to sell the pound. One of the main beneficiaries proved to be the Japanese yen, which trimmed last week's losses to trade near a five-week high across the board. Risk aversion dominated the session as stocks worldwide slid on an increasing economic gloom in the wake of a report on possible net losses at Goldman Sachs Group. Elsewhere, there were falls for the AUD after the Reserve Bank of Australia slashed interest rates by 100 basis points to 4.25 per cent.

Sterling (GBP)

The pound suffered its biggest single daily loss against the dollar since the sterling crashed out of the Exchange Rate Mechanism in 1992. Risk aversion appears to have been at the root of the sterling's decline as plummeting stock markets and the prospect of a sharp interest rate cut from the Bank of England this week prompted a massive sterling sell-off.

US Dollar (USD)

The US dollar took full advantage of a deteriorating global economic outlook to end the day higher across the board against all the other major currencies. In troubled times, investors are attracted by "safe" investments such as US Treasury bonds and furthermore, American firms also seek to repatriate funds to the US in a bit to boost liquidity. Both of these movements generate significant inflows of capital to the US, helping to prop up the dollar's value.

Euro (EUR)

The euro rose against the sterling, but lost ground versus the US dollar as a record drop in eurozone CPI and rising unemployment leaves the odds in favour of a rate cut by the European Central Bank this week.

Japanese Yen (JPY)

Bank of Japan Governor Masaaki Shirakawa said the central bank could provide about three trillion yen of funds to banks via new operations using corporate debt.