Chris Redfern Moneycorp

An unusually quiet start to the week belied the agitation that was to follow.

Between Monday morning and Wednesday morning the biggest movers were the Canadian and New Zealand dollars, which weakened and strengthened by -0.4 per cent and 0.5 per cent respectively. On Wednesday it all kicked off.

The UK employment data were not bad; jobseeker numbers continued to fall in October and the gap narrowed between inflation and wages. An hour later the Bank of England published its quarterly Inflation Report and the British pound began a retreat that has since cost it 2 per cent of its value.

While the Bank of England is not renowned for the accuracy of its forecasts, investors could not ignore the prediction that UK inflation would fall below 1 per cent within six months and that it would remain well below target for another year.

That would mean no interest rate increase for another year. At a stroke the Old Lady destroyed one of sterling's main attractions to investors.

The Japanese yen came under even more pressure. The story there was that prime minister Shinzo Abe was about to scrap next year's sales tax increase and call a snap general election. At the beginning of this week the yen had fallen to a seven-year low against the dollar before it was rescued by news that Japan was back in recession after the economy unexpectedly shrank for a second successive quarter.

Ah, the irony: investors bought the yen for its safe-haven qualities because the Japanese economy was in another mess.

Underlining the uncertainties which currently permeate financial markets, Britain's prime minister wrote in Monday's Guardian newspaper about 'red warning lights… on the dashboard of the global economy'.

It is not an original view but it ought to be reassuring that politicians are trying to keep up with the game this time around.