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Sterling has a volatile day

After starting the day near 1.55, the pound started to slip during trading against the dollar and yen on Wednesday, retreating from a two-week high against the US currency the previous day as falling stock markets prompted a bout of profit-taking. As expected, data release yesterday showed the UK economy had slid into recession as GDP dropped 0.5% in the third quarter, the first decline in 16 years.

As a result, that's hinting towards the BOE considering cutting interest rates again after last month's dramatic 150B/P cut. Overall the GDP/USD traded with a low of 1.5179 and a high of 1.5444 before closing the day at 1.5350 in the New York session.

The Greenback just managed to maintain strength yesterday even as oil and stocks rallied.  Data coming out of the US was extremely weak yesterday as consumer spending fell to -1% and October Durable Goods down to -6.2%.  Also released were weekly job losses, which remained high at 529k.US new home sales fell 5% in October, the biggest decline in 18 years, this fueled speculations that the FED might cut interest to avert a prolonged recession.  

The Euro slipped off to the 1.30 yesterday and remained weak during the day as markets began to focus on possible up and coming rate cuts from the ECB. Rallies in oil and the DOW helped lift the Euro out of lows against the greenback. The European Union has proposed a EUR200 billion economic stimulus package aimed at reviving the 27-nation economy and to limit the impact of the global financial crisis. There was little effect on the currency however as markets await the package's fine print.  Overall the EUR/USD traded with a low of 1.2822 and a high of 1.3032 before closing the day at 1.2895.