Sterling goes downhill on recession fears

Sterling went downhill when BoE Governor King spoke last night about the economy of UK and also mentioning that the UK appeared to be in recession.

He also stated that in the last few weeks, the financial markets were hit the hardest since the First World War, with it only now being the start of a slow and weighing recovery of the UK Economy. On the data front the CBI orders released yesterday showed a drop from -26 to -39. Due out today are the MPC minutes expected at 9-0 vote for a rate cut.  Also BoE Governor King is speaking again at 20:10 tonight.

The Dollar made considerable gains as the FED plans to set up a new program to buy assets from funds. Main news today from the US is speeches due from Fed officials and Treasury Secretary Paulson, due to speak late tonight.

The Euro hit its lowest level against the USD in recent months with 1.3051 being the lowest; however this morning the EUR/USD has started trading at 1.2736 at its lowest but managed to make some gains. The Euro's weakness is due to the speculation that the ECB is planning to cut rates aggressively to stop recession.