By Nigel Hodges of Currency Solutions

There was singing and dancing in the streets last weekend as London came out to play in the Notting Hill Carnival and was watched by the world in the official Olympic handover ceremony.

Let's call this week the official hangover, as sluggish markets contributed to headache-inducing lows for the pound and euro , with the star performer being the chipper US dollar .

Stellar efforts for second quarter growth in the US, given the conditions, have confirmed the currency remains buoyant despite the recessionary shadow looming large in recent months. In comparison, the euro and pound have remained weak, with the slight rebound mid-week providing only short-lived relief for the apathetic economies.

Although the midweek lull confirmed speculation that the recent rise of the US dollar has been a little over-dramatised, the dollar remains the strongest of the major currencies this week.