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The value of the pound against the dollar and the euro will be under intense scrutiny today after a weekend when political fault lines widened over the best way to keep Britain from sliding into deep recession.
George Osborne, the shadow chancellor, yesterday renewed his claim that Britain's ballooning public sector debt is triggering an unprecedented collapse in the value of sterling, insisting it is his job to tell the truth.
With the markets likely to mark sterling down further this week in the face of further poor economic data, Osborne is preparing to defend himself against Labour claims that his remarks have speeded up sterling's decline.
David Cameron, the Conservative party leader, is expected to come to his defence in the Commons today, when he replies to a statement from Gordon Brown about the summit of G20 leaders held in Washington at the weekend.
Labour claimed yesterday that Osborne had broken an unwritten convention not to talk about the exchange rate, adding that his remarks were ill-judged and partisan.
But Osborne insisted "the markets are looking at the economic fundamentals; they're not looking at what politicians, be it myself or indeed any other politician, are saying".
He added: "What we're seeing before our eyes is the largest fall in the pound in modern British history. The Brown devaluation of 30% in recent months is bigger than the Wilson devaluation or the Callaghan devaluation.
"One of the reasons is Gordon Brown's decision to abandon fiscal responsibility and prudence as his boom turns to bust. Now behind-the-scenes spinning from the prime minister and his entourage in America are fuelling speculation that the government is planning to borrow recklessly for a big unfunded tax con."
As the government moved to question the Tories' judgment, it was pointed out that Osborne's is not the only voice talking about the falling pound. Last week, the former Treasury permanent secretary Lord Burns had warned of a painful fall in sterling.
There is intense debate among economists as to whether sterling's fall matters, either because it will trigger inflation, or that it will lead the Bank of England to slow down further interest rate cuts.
The pound has lost around 25% against a basket of major currencies over the past year, but the bulk of the drop has come in the past three months as financial markets have been spooked by the British economy's rapid descent into recession. On Friday, it fell to its lowest level in 13 years on a trade-weighted basis and now buys just $1.47, down from $2 in the summer. It is also at a record low against the euro.
Apart from public finance figures, economic data out this week is likely to put further pressure on the pound, with retail sales figures on Thursday expected to show that consumers are reining in spending. On Tuesday, inflation numbers will be watched carefully to see how far the cost of living is being pulled down by falling oil and food prices.
Investors will also be looking out for the minutes of the Bank of England's meeting on 6 November - due on Wednesday - for more details about why the Bank took the unprecedented decision to cut UK interest rates by 150 basis points, and how deep it believes the recession could be. Some believe the flight of foreign investors will make it difficult to fund the deficit.
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