Sterling fell against both the euro and US dollar on Monday, in spite of worse-than-expected data releases from both regions. With markets nervous ahead of Thursday's referendum on Scottish independence, sterling found itself drifting lower amid fears over the heightened political uncertainty a 'Yes' vote could bring. With some analysts stating that sterling could lose more than 10 percent of its value, investors are, given the uncertainty, cautious in supporting the pound.

Tuesday we could see increased movement in the markets, with inflation data released this morning. Following a disappointing fall to 1.6 percent last month, another drastic decline could see sterling struggle to fend off further advances from across the board.

Euro holding steady (for the short term?)

Continuing on from last week, the euro remained relatively flat against the majority of its peers yesterday, closing almost aligned to the level at which it opened. The only real movement seen was against the US dollar, against which the euro rose to one-month highs, owing to dollar weakness but the euro still found itself below the 1.30 level.

It is likely that we will see the euro remain relatively range-bound against sterling this week in anticipation of the Scottish referendum results on Friday. Should we see any significant news surrounding the voting, expect markets to react. Another catalyst to euro movement will be German economic sentiment data. With the German economy being the most influential of the entire European bloc, any significant data releases will be watched closely by the markets.

US dollar has a quiet start to the week

US dollar markets and performance were mixed yesterday, which was down to varying results from the economic indicators. The US currency started well, seeing some gains on the back of better-than-expected Empire State Manufacturing figures. However, the currency fell later in the day following an unexpected drop in US industrial production. This monthly figured had declined in August, which detracted from some of the recent positivity from the country, cooling some of the speculation over interest rate rises.

Ruble continues to fall

Monday saw the Russian ruble continue its downward spiral against the US dollar. New all-time record lows were caused by the latest round of concerns over Western sanctions. This followed on from the sanctions imposed by the US and the European Union on Friday, which are in response to what is believed to be Moscow's role in the separatist conflict in Ukraine. The newest round of sanctions targets significant Russian oil and energy companies.

The Canadian dollar gained ground on its US counterpart on Monday following the release of mixed data from the US. However, the US dollar stayed within touching distance of a six-month high as recent weeks' expectations of an early hike in US interest rates continued.

— Charles Purdy, Director of Smart Currency Exchange.