Pound at 23 Year Low Against the Dollar The British Pound fell further on Thursday after reaching a 23 year low against the US dollar amid fears that the UK is heading for a severe financial crisis. The pound briefly fell more than 2%during Thursdays trading, hovering above $1.3620 and offered little Forex opportunity. UK stock markets remained volatile after suffering major losses earlier in the week. Many believe that another government bailout plan may not be enough to save the banking sector.

UK Financial Sector Under Immense Strain Recently released figures showed a decline in UK factory orders and a drop in automobile production prompting a selloff of the beleaguered Pound. Many believe that Bank of England will have to do more than cut interest rates to rescue the economy. The Pound continued to suffer from risk aversion and limited Forex opportunities. Lee Hardman, currency analyst at BTM UFJ in London stated, "The major theme in the UK is the financial sector, which is still under immense strain. The market is taking the view that nationalization of at least part of the UK banking sector is almost inevitable and this is weighing on sterling."

Pound May Fall Further The fall follows the news that the Bank of Scotland posted the largest financial losses in British history which has weighed heavily on the British financial sector. Many expect the Pound to fall to $1.32-1.30 against the US dollar before recovering. Since the beginning of this week the Pound has fallen 7% its biggest weekly fall since late October. The Pound has declined by 30% since July, 2008 when the Pound bought $2.00. Investors are selling the Pound and taking advantage of the Forex opportunities offered by other currencies.

Bank Of Scotland Posts Record Losses The losses posted by the Bank of Scotland highlighted the dire condition of the British financial industry. Many believe that further government intervention is necessary. Bank of England Governor Mervyn King said that policymakers need to consider new ways to stimulate the economy such as buying assets as interest rates, already slashed to 1.5%, are headed towards zero.

Dollar and Yen Still Strong While the Pound continues to fall the US dollar and the Japanese Yen continue to perform strongly and still offer Forex opportunities to savvy investors. Both the European Union and the UK now realize that the global recession is more severe than was once thought. Hopefully both the EU and the UK will take the actions necessary to bring about recovery.