Sterling weakens on poor data and risk aversion

Sterling has traded lower against a whole basket of currencies today after risk aversion saw investors sell the risky pound and seek safer positions. In the US, Fed Chairman Ben Bernanke warned that unless government efforts succeeded in restoring financial stability, the US recession may not end this year. Furthermore, US figures showed that consumer confidence fell to a record low in February and houses prices fell at a record pace in December.

Poor British data has further undermined sterling's position as British business investment fell at it's steepest rate since 1991 (-7.7% for 2008) and the British Bankers' Association reported that mortgage approvals fell 43% in the year to January.

Tomorrow Caxton will post on quantitative easing, a tool it seems ever more likely the Bank of England will utilise to stimulate the economy and combat deflation.

GBPEUR: Today's trading. Click on the graph to enlarge.

GBPUSD: Today's trading. Click on the graph to enlarge.