Sterling fell to the lowest level against the euro in 7 weeks after speculation that the Bank of England will expand its Quantitative Easing programme as early as next month. The pound dropped as low as €1.1936/£1 in overnight trading after a better than expected Spanish debt auction and cautiously optimistic comments from European Central Bank President Mario Draghi. Yesterday also saw a wide array of UK retailers delivering their Christmas trading results – it was very much a mixed bag and put investors on the back foot, increasing concerns over the possibility of a double dip recession. Call in now for a live exchange rate.

In the euro zone, the euro strengthened to a 7 week high against the majority of its counterparts as ECB President Mario Draghi said that the supply of cheap money released by the central bank last month was helping to stabilise the banking system and in turn the euro zone economy. As a result, the euro made a recovery throughout the day and is back below €1.20 against sterling. However, many feel that the lack of a credible solution to the euro zone crisis is set to keep the euro under pressure over the coming months. Ensure you don't lose out by speaking to one of the team sooner rather than later.

In the USA, the US dollar came under pressure yesterday as a result of the euro recovery following the success of the Spanish bond auction that gave risk appetite a boost. However, with poor industrial figures in the UK, sterling failed to capitalise on this boost to risk and many market analysts expect sterling to continue to fall off against the US dollar in the coming weeks and months.

Elsewhere, China's foreign exchange reserves fell for the first time in a decade as foreign investment in the country fell and investors liquidated investments in emerging markets. China's foreign exchange reserve is the world's largest and has grown steadily – is it the first signs of a period of global rebalancing? We shall have to wait and see. Call in now for a live exchange rate.

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