UK Inflation released this morning has shown price pressures easing from 3.4% to 3% which has now increased the possibility of an interest rate cut by the Bank of England next month.

The British Pound faced selling pressure on Tuesday following the release of weaker than expected UK unemployment data. The readings from the data, suggest markets now raised the probability of an interest rate cut from Bank of England in March.

Markets have been particularly volatile over the past week, with the FX space dominated by a clear tug-of-war between a softer US Dollar, shifting risk sentiment and regional political developments.

The Australian Dollar has hit a three-year high today after aggressive comments from Reserve Bank of Australia's deputy governor Andrew Hauser helped to strengthen expectations for another interest rate hike later this year.

The US Dollar is drifting slightly lower this morning, as investors wait for a heavy run of US economic data that will help shape interest rate expectations.

Sterling has continued its fall off from 1.37 against The Dollar and 1.16 against the Euro as investors and traders position themselves ahead of this afternoon's Bank of England interest rate decision.

The U.S Dollar has largely remained subdued over the last few days as the nomination of Kevin Warsh for the Federal Reserve Chairman has increased speculation of a more dovish Central Bank moving forward, with the aim of keeping interest rates low to stipulate economic growth and employment.

Reserve bank of Australia did raise their interest rate levels this morning. Even if the monetary action was expected, we have seen AUD making moves against its peers, with GBP/AUD down roughly one percent.