By Nigel Hodges of Currency Solutions

Well, it's been a sobering week internationally with no shortage of drama on the scene.

Terrorist attacks in Mumbai suspended Indian trading yesterday and anti-government protesters closed the airport in Bangkok. Rescue packages, growth and anticipated interest rate cuts have been the major market drivers this week as a sense of cautious confidence has increased risk appetite, supporting the higher yielding currencies internationally.

The UK, Eurozone and the US have each proffered their own version of an economic recovery package this week, which, combined with the prospect of interest rate cuts next week, has bolstered market confidence.

In the UK, the Pre-Budget Report released on Monday boosted Sterling as it outlined government plans to ward off a deep and protracted recession. Including the much publicised reduction of VAT to 15% and an increase in the top tax rate to 45%, the report also provided £1 billion for small businesses loans and a raft of other measures designed to prise open the public purse.