An empty week of economic data left the Japanese yen to trade purely off of shifts in risk sentiment, and a downturn in risky asset classes pushed the currency higher against the US dollar and other major counterparts.

The Bank of England rate decision will be important in setting yield expectations for the British pound.

The Japanese yen lost ground to the dollar for the first week in two months as Japanese fundamental data signaled that the economy is headed into a prolonged recession.

The British Pound tumbled against all major currencies, as a steady wave of dismal economic data doomed the Sterling to further losses.  Deterioration in Bank of England interest rate outlook and a larger-than-expected British unemployment rate gain further cast further gloom on fundamental sentiment.

The euro posted its best single-week performance in eight years, as an outright tumble in the US dollar left the Euro Zone currency as the prime beneficiary of a turn in market sentiment.

The British pound has been acting tipsy just above its precarious support level at 1.45 against the US dollar. Data this past week was heavy hitting, but no surprises were generated from its collective impact.

The Bank of England cut their benchmark rate by 100 bps as was expected by economist bringing it to 2.00%. The pound traded higher on the news reversing earlier losses as traders started to expect a more aggressive move given the dour fundamental data that has recently crossed the wires.

A steady stream of disappointing economic data added further gloom to British economic forecasts, and the general mood remains dour for the British pound.

The euro was on the verge of setting fresh 31-month lows against the US dollar on a plunge in the Dow Jones Industrials Average and other key stock indices, but an amazingly quick recovery in risk sentiment pushed the US dollar and Japanese yen lower across the board.

While most of the currency market was consolidating this past week, the high volatility underlying the market led the fundamentally weak British pound to push new lows. And, considering the outlook for growth and interest rates, the immediate future looks bleak for this once high-flying currency.