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Sterling has been battered in the past couple of trading sessions, as investors make their feelings about last week’s (not so ‘mini’) budget announcement from the UK government abundantly clear.

The past week has been one of the most tumultuous in currency markets in quite some time.

The Federal Reserve raised interest rates by another 75 basis points on Wednesday, as expected, while indicating that it still has some way to go before it considers bringing its hiking cycle to a close.

The Bank of England is certain to raise interest rates again at its delayed September meeting on Thursday, although the magnitude of the hike (50 vs. 75 basis points) is more of an open question.

This week in the foreign exchange market is all about central bank announcements, with this evening’s FOMC meeting the most important of the lot.

The Federal Reserve received an unpleasant surprise last week, in the form of a hotter-than-expected inflation number that showed no hint that price pressures are abating.

The ECB massive 75bp hike, followed up by hawkish comments from the usual "sources", sent the common currency soaring against most of its global peers, dragging along all other European currencies, while the Japanese yen ended up again at the bottom of the rankings, dragged down by the Bank of Japan insistence on remaining the last dovish holdout among the G10.

The euro seemed to be about to lock in a decent performance last week, buoyed by expectations of a hawkish ECB and a labour market report in the US that signalled to the Fed that pressures there may be easing.

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