A more risk adverse attitude returned to the market, especially after the World Bank announced that prospects for the world economy remain largely "unusually uncertain" as it cut its 2009 growth forecasts for most economies.

Sterling

Gains against the euro helped lift sterling to a seven-month high against a basket of currencies, as investors continued to support the view that much of the bad news on the UK economy is already priced into its currency. These early gains though were soon near erased as equity markets turned sour. Sterling was unable to hold onto gains against the US dollar as a greater risk appetite re-entered the market.

US Dollar

As safe haven positions were put back on, the US dollar was seen to be largely supported. The greenback is likely to find continued strength as reaction continues to the World Bank's downward revisions to its global growth forecasts, which highlighted the possible unsustainability of a near-term market recovery.

Euro

Despite a better than forecast release of German business climate index data, which rose to 85.9 in June from the previous month's 84.3, and beating forecasts of 85.2, more attention was paid to its corresponding headline which announced that despite better-than-expected sentiment, any economic recovery would continue to be slow. The subsequent euro sell-off could also be blamed upon concerns over the acknowledgement that Germany could be set to raise its net borrowing target in 2010 to a record level that may exceed €100 billion. European Central Bank President Jean-Claude Trichet also announced the ECB would not provide the eurozone with more fiscal stimulus.

Japanese uen

The downward revision of the World Bank's global growth forecast for 2009 erased recent hopes that a near-term economic recovery had been met and encouraged the return of safe haven positions.