It was a “death of a thousand cuts for sterling last week” and a succession of minor wounds left the pound in a weakened state, according to Moneycorp.

In its weekly update for FPJ, the currency analyst said the most damaging factor was UK unemployment and the loss of 33,000 public sector jobs, “not one of which was replaced by the private sector”.

Inflation is a worry too, having accelerated to 3.3 per cent and the latest survey shows that people expect prices to be rising at 3.9 per cent a year in 12 months' time.

The New Zealand economy is “not in the rudest of rude health” and retail sales were down by -2.5 per cent in October and business confidence fell from 33.2 per cent to 29.5 per cent, Moneycorp said.

The analyst added: “The Australian and Canadian dollars did better, avoiding the handicap of unfortunate ecostats and taking advantage of investors' increased risk appetite earlier in the week. That rather evaporated later on after ratings agencies threatened to downgrade the government bonds of Belgium and Spain and really did downgrade Irish debt. The news did no real damage to the euro; investors were happy to wait and see what the EU summit meeting in Brussels would come up with. There was no rush into the US dollar either, despite a sprinkling of relatively positive US economic data. Instead it was the Swiss franc that investors decided to favour as their alternative to the euro.

“The fortnight of seasonal inactivity that started this Monday will not mean no price movement but the relative illiquidity could lead to unexpected spikes and troughs. Take particular care of payment instructions at the end of this week; an error on Friday would mean four days of overdraft interest.”

Top currencies for the week

Percentage change against sterling

CHF3.4%

SEK2.5%

NOK2.0%

JPY1.9%

AUD1.9%

USD1.5%

ZAR1.2%

CAD1.2%

EUR1.2%

NZD0.2%

GBP0.0%