There was also further speculation that the interest rates would be cut by more than the predicted 100 basis points.
Euro also had a bad day against all the majors apart from Sterling. Eurozone PMI and retail sales dropped, which also caused the market to predict that the interest rates are going to be dropped more than the expected 75 basis points.
With UK and Euro having bad data coming out constantly throughout, it is more likely that UK may cut interest rates more than the Euro which is causing the Euro to strengthen against Sterling. The Eurozone tend to give a more clear indication about their motives than UK which tends to leave the market open for speculation and therefore is more volatile in the market, causing a large decline across board.
Due out today is the interest rate decision for both the UK and the Euro with Trichet speaking at 13:30 UK time.
Other news, New Zealand put their interest rates down by 150 basis points to 5%.