Sterling surprisingly was the biggest winner as stronger than forecasted UK services sector data was released. The dollar weakened versus the majors as investors moved away from the perceived safe-haven dollar and took their bets on more risky instruments such as commodities, equities and the emerging markets. Elsewhere, the euro was unshaken by the news that Fitch's ratings agency is downgrading Ireland's sovereign debt.

Sterling

The pound strengthened across the board after better-than-expected UK services sector figures were released and as a rebound in equity markets eased risk aversion ahead of the Bank of England policy decision. Services PMI rose for a sixth consecutive month to 56.9 last month from the previous reading of 55.3 helped by growth in new orders.

US dollar

The dollar lost ground against the euro and a basket of currencies as firmer equity and commodity prices brought back appetite for risk and investors braced for a policy decision from the Federal Reserve. Mixed data showed the US service sector grew in October for the second month running however at a slower pace than predicted.

Euro

The euro held quite steady even though the Fitch rating agency downgraded Ireland's long-term sovereign debt from AA+ to AA- due to its slowing economy and worsening fiscal position. The move came in as a result of the severe decline in nominal GDP and the exceptional rise in government liabilities. While Germany and France, the two largest economies in the eurozone, have shown an improvement in economic performance and pulled out of a recession in Q2, other countries such as Spain, Ireland and Greece are still mired in recession and worsening fiscal conditions.

Japanese yen

Increased risk appetite kept the yen under a degree of pressure although the currency could well recover depending on the outcome of the central bank policy decisions in the UK and Europe.