The pound reversed many of the gains seen over the past week against the euro yesterday, as markets snubbed the new US bailout plan. Global equity markets fell after the plan was announced, over fears that the rescue plan is too vague and may not go far enough to rejuvenate the world’s largest economy. Investors favoured safe haven currencies such as the dollar and the yen, and dumped the relatively higher risk pound as risk aversion took hold. Indeed, sterling could not be saved by better than expected trade balance figures released in the morning, which showed that the UK’s trade gap narrowed to levels not seen since June 2007.
There are no major announcements due in the eurozone today, whilst investors will take a keen look at the Bank of England’s quarterly inflation report and unemployment figures released this morning.
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