Sterling fell to its lowest in nearly three weeks against the US dollar yesterday, getting dragged down by euro weakness against the US dollar as a downgrade of Greece's credit rating worsened euro zone debt concerns. Sterling dropped to a low of $1.6270/ £1 – the lowest since April 19th. In a quiet day for UK data, the market focus was very much on the euro zone, but there are key figures released on Wednesday in the form of the Bank of England’s quarterly inflation report. A poor run of figures last week put a dampener on expectations that the Bank of England will increase interest rates before the end of 2011. Today also sees house price data and retail sales figures so call in now for a live exchange rate.

In the euro zone, the euro fell against the US dollar yesterday, hitting its lowest level in nearly three weeks after credit rating agency Standard and Poor's cut Greece's debt rating to near junk bond status. S & P stated that it was increasingly likely that Greece would need to restructure its debt, as other European countries would be putting the holders of Greek debt under pressure to accept later repayments to loosen up the terms of the bailout and protect market sentiment. Out today, there is French and Italian industrial production figures, so call in for a live exchange rate.

In the USA, the US dollar saw a boost from risk aversion related to a re-emergence of the Greek debt crisis after the credit rating downgrade. Out later today, there is import prices and economic optimism figures. In addition, a member of the Fed’s policy making team speaks at a conference in St. Louis, which could potentially have an impact. Call in now for a live exchange rate.

Elsewhere, the Canadian dollar reversed advances against its U.S. counterpart after the Greek rating cut, as global demand for ‘riskier’ assets slipped following the announcement. In a similar vein, the South African rand weakened against the US dollar falling as much as 0.6% to 6.7471 per dollar, and traded 0.5% weaker at 6.7380.

Get a live quote and/or more information from Smart Currency at: http://www.smartinternationaltrade.co.uk/