Sterling fell to the lowest level for two weeks against the US dollar as data showed U.K. construction weakened amid mounting concern that U.S. spending cuts may curb global growth. The pound also hit an all-time low against the Swiss franc after building activity slipped in June – adding to the poor outlook after British manufacturing unexpectedly shrank the most in more than two years yesterday. Sterling had been benefiting from the dual debt crises in Europe and the USA, but focus has shifted back to UK fundamental figures. UK bonds are now cheaper than US ones showing that markets now view UK debt as a safer haven than the USA which has been the benefactor of safe haven flows for several years. The Bank of England meet tomorrow and are likely to keep rates on hold at 0.5% - call in now for a live exchange rate.

In the euro zone, Italian and Spanish bonds came under pressure again yesterday, with yields jumping to euro-era records on concern that a slowdown in global growth will stop efforts to trim sovereign debt. The euro strengthened against the US dollar as poor US spending figures dented the US dollar. Out today, there are retail sales figures and purchasing data for the euro zone so call in now for a live exchange rate.

In the USA, Congress granted final approval to a deficit-cutting package that will avert a U.S. debt default but may not be enough to prevent a damaging downgrade of the top-notch American credit rating. One rating agency warned earlier in the week that if the deal did not go far enough, it would downgrade the USA’s AAA rating. This would raise borrowing costs and dent the recovery further. Despite being passed into law, markets tumbled with US stock markets closing down nearly 3%. Further consumer spending figures showed the first drop since 2009 compounding market fears.

Elsewhere, the Canadian dollar fell to a 2 week low as the poor US spending figures dented prospects for the country’s largest trading partner. The Swiss franc strengthened against all major peers tracked by Bloomberg. European stocks fell to a 10-month low on concerns over sovereign debt. Call in now for a live exchange rate.

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