The US dollar rallied strongly hitting a seven-year high against the sterling and a six-week high against the euro. The move came as Americans, markets and indeed the world looked forward to the inauguration of the new President, Barack Obama. Rarely has a President-elect faced a more daunting challenge, with geo-political uncertainty widespread, and the world economy in disarray. Elsewhere, the sterling came under heavy selling pressure across the board after the Royal Bank of Scotland recorded the biggest loss in British corporate history and revived concerns about the global banking sector.

Sterling

The sterling was heavily sold off against the US dollar but remained steady against the euro as traders digested the UK government's latest attempts to revive lending among banks. Share prices in the banking sector have plummeted on renewed concern over losses and write downs following the news that Royal Bank of Scotland's losses exceeded £20 billion last year.

US Dollar

Even though US financial markets were closed, the US dollar still managed to gain against a basket of currencies over concerns about the banking sector and also as a result of the feel good factor surrounding the presidential inauguration.

Euro

The euro continued its downward spiral against the dollar and the pound due to the great amount of uncertainty over the health of the eurozone economy and the outlook for the eurozone fundamentals. In turn this is undermining investors' confidence in the single currency.

Japanese Yen

The yen starts the session at a record high against the pound after Britain's multi-billion pound bank rescue plan failed to reassure investors. The yen remains strong even though data was again disappointing.