Sterling plummeted yesterday afternoon against the US dollar and euro, dropping by 1.2% against the euro as poor data and spreading looting and violence in the UK concerned investors. Manufacturing figures unexpectedly showed a 0.4% contraction against an expectation of a 0.2% gain and the trade deficit unexpectedly widened. In addition, markets clearly became concerned over the escalating rioting in the UK which had spread as far as Liverpool and Birmingham. At the end of last week, investors saw the UK as a safe haven, but with all the damage being done markets are concerned that this will impact the UK’s already weak growth even further. Later today we have the Bank of England’s inflation report, in which the Bank is expected to downgrade growth forecasts. Call in now for a live exchange rate.

In the euro zone, the euro strengthened against the US dollar yesterday as European Central Bank President Jean-Claude Trichet said the ECB was actively buying Spanish and Italian government bonds. German exports slipped unexpectedly and with stock markets still experiencing volatility and panic, the euro dropped further against the safe-haven Swiss franc. The euro has fallen by roughly 15% against the franc so far this year. Some analysts even speculated that the Swiss franc could reach parity (1:1) against the euro, despite the Swiss National Bank's recent move to cut interest rates and warnings over the franc's strength. Call in now for a live exchange rate and to avoid losing out.

In the USA, the markets rebounded off yesterday’s lows as investors focussed on Tuesday evening’s meeting of the Federal Reserve. Recent manufacturing and employment data in the country has pointed to a slowdown in the world's biggest economy, leading some to fear the country could slip back into recession. Many expected Fed Chairman Ben Bernanke to announce some form of stimulus to stabilise the economy. However, with interest rates at near zero and the last round of bond purchases having failed to stimulate credit conditions, some were unsure what options the Fed has left. In the end, the Fed pledged to keep interest rates on hold until at least 2013. Call in now for a live exchange rate.

Elsewhere, the Swiss franc soared on Tuesday to record highs for a third straight day against the euro and dollar as concerns about the global economic outlook and a rout in stock markets drove investors to safety. In addition, the Japanese yen, which also tends to benefit in times of market stress, breached 77 yen per dollar, above levels that triggered official intervention from Tokyo last week. Volatility in the safe havens is high, so call in now for a live exchange rate.

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