The British pound pared the advance from earlier this month as economic activity in the U.K. unexpectedly weakened in the fourth quarter.

The spotlight falls on the Bank of England as it publishes minutes from January's MPC meeting.

The Japanese yen was flat on the week against the dollar but saw sharp declines against the euro and pound.

Relative yield spreads have taken the top spot as the driver of British pound price action.

Gold prices finished the last trading day of 2010 perched just below their record high.

Traders would be wise to exercise extreme caution, both with initiating new positions and managing existing ones.

The British pound lost approximately 1.79 percent against the greenback this week as the European debt concerns continue to rattle the markets, while the fundamental developments in the U.K. begin to paint a bearish picture for the pound.

The Japanese yen lost ground against the U.S. dollar as rising yields for U.S. Treasuries sparked increased demands for the greenback, but the exchange rate is likely to face increased volatility over the following week as the Federal Reserve convenes for its last interest rate decision in 2010.

The British pound pushed higher against the greenback this week, but the advance may be short-lived as the outlook for Great Britain points to losses.

The British pound pushed lower against the U.S. dollar this week and will likely continue its southern journey in the near term as debt fears in the Euro-Zone continue to rattle the markets.