Sterling dropped sharply against the euro yesterday after key Bank of England policymaker Paul Fisher signalled that the UK could be in for further Quantitative Easing if deflationary pressures mount. With recent UK data underperforming, analysts have pushed back expectations of an interest rate hike in the UK well into next year. Earlier in the year, markets had been anticipating an interest rate rise as early as April 2011, so this rather dovish assessment by Fisher is not necessarily a surprise. The Bank of England’s minutes from this month’s meeting are released today and they are expected to show a continually loose monetary stance from the Bank of England. Ensure you protect any future payments in case sterling drops much further.

In the euro zone, after a turbulent day on Monday, the euro held on to slim gains against other currencies as investors bet that a rescue plan would be put together to prevent Greece from defaulting on its debt. However, there was a major hurdle in the form of a confidence vote in the Greek Parliament. PM George Papandreou had to win the vote in order to pave the way to enacting tough austerity legislation. The vote did in fact see the PM win the vote of confidence and investors took profits from the relative strength of the euro. Call in now for a live exchange rate.

In the USA, the US dollar had a subdued day for the most part yesterday as a recent run of poor economic data left investors expecting the worst ahead of the Federal Reserve’s policy meeting. Data released yesterday showed that purchases of existing homes fell last month and the poor performance of the housing market is one reason why many expected the Fed to maintain monetary stimulus or even increase it. The Fed’s statement is due later today, and most are not expecting any US dollar strength as a result.

Elsewhere, the Australian dollar fell yesterday after the minutes of the Reserve Bank of Australia's June meeting showed the bank thinks recent data has not added any urgency to the need for monetary tightening. Get in touch now for a live exchange rate.

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