After a spectacular performance against the Aussies in the Ashes this summer, the England cricket team has followed this up with a crushing defeat in the NatWest series, losing 6-0 to their antipodean counterparts. This performance unfortunately, has not been limited to the pitch and the pound has sunk to a decade low against the Australian dollar this week, on the back of weak economic data.

This week has been awash with market data, leading to exchange rate volatility for all the major currencies. The US dollar lost ground and the pound slipped even further against its major currency partners, while the major winners have been the euro, Aussie and Kiwi currencies.

In the UK this week negative economic data has kept sterling under pressure. Inflation continues to fall, hovering around 1.8% and unemployment rose to 2.47 million, or 7.9%. The Bank of England predicted that inflation will continue to decline into late autumn and further stimulus could be necessary in the UK. Retail sales were also flat, rising just 0.2% on the month and the level of public sector borrowing increased to GBP16.1 billion.

This downbeat news conspired to push sterling exchange rates lower, with the pound declining as low as 1.10 against the euro and reaching decade lows against the Australian and New Zealand currencies. The UK appears to still be struggling to gain a foothold when it comes to recovery, and the suggestion that inflation will continue to fall until late autumn means we can expect currency transfer rates for the pound to remain bearish until then.

In the US figures have been much more positive. Retail sales leapt ahead of market expectations as the Fed's "cash for clunkers" initiative boosted new vehicle sales by 5%. The Philadelphia Fed manufacturing index rose and signs of recovery led exchange rates for the US dollar lower as risk appetite rose in the market. Building permits and housing starts also improved, fuelling optimism in the US.

The major benefactor of this good news has been the euro. The single currency has rallied this week, climbing over 2.5% against the US dollar and reaching its highest level in months against the pound. ZEW economic sentiment surveys came in positive for Germany and the Eurozone, while the European Commission predicted the region would grow in the third quarter. Inflation in the eurozone is currently at 1.3%.

Elsewhere, the New Zealand currency is heading for its largest rally since 1999 against the US dollar this week, fuelled by a surge in market confidence. Japan opted to leave interest rates on hold at 0.1% while Turkey continued to reduce theirs to 7.25%. The Canadian and Australian dollar exchange rates have also remained firm, buoyed by higher commodity prices and economic optimism.

So this week the barrage of data has led to a see-saw between risk appetite and risk aversion for currency exchange rates. This proves that volatility is alive and well in the market and it may continue as the road to recovery is expected to be long and rocky. If you need to transfer currency internationally, don't leave yourself at the mercy of currency volatility. Currency Solutions have personal currency brokers who will monitor the markets on your behalf and provide you with up to the minute information when it comes to currency exchange. To see how much you could save, give us a call on 0207 740 0000 or visit us online at www.currencysolutions.co.uk

Have a good weekend.