The pound hit lows against the dollar and the euro as gilt futures rose following the BoE Governor’s comments this morning.

Pound Sterling – UK Markets

Sterling hit the day's low versus the dollar and the euro as gilt futures rose to a session high after Bank of England Governor Mervyn King said the UK's recovery was fragile and risks to the MPC's central view of a gradual recovery remained to the downside. Sterling fell around 60 ticks to a session low versus the dollar of USD1.5450 and at 0946 GMT traded at 1.5520. Against the euro the pound slid to a session low of 88.28 pence and traded at 1.1389 at the time of writing.

US Dollar – US Markets

The dollar fell against the euro in earlier trading on prospects the Federal Reserve will hold its target interest rate near zero to sustain a recovery in the world’s biggest economy. The US currency dropped against 12 of its 16 major counterparts on speculation Fed Chairman Ben Bernanke will tell Congress tomorrow that last week’s increase in the discount rate isn’t intended to drive up borrowing costs. Traders are paring bets on higher US interest rates as Fed officials sought to damp speculation last week’s increase in the discount rate heralds the start of a period of tighter monetary policy. At 0955 GMT the dollar traded at USD0.7338. This afternoon's Case Shiller House Price index data and consumer confidence figures for February are expected to show declines relative to previous months and highlight the continued fragility of US economy, thus underlining the continued low rate policy.

Euro – European Markets

The euro rose against the yen after a newspaper reported Dubai provided more funds to Dubai World, easing concern that European banks will incur losses on loans to the Gulf emirate. With no news expected from the Euro-Zone today, the single currency’s movements will likely be determined by shifts in equities as well as news from the US. At 0953 GMT the euro traded at 124.005 against the yen and 0.8780 versus the pound.

Other Currencies – Highlights

The Australian dollar rose in early trading after Reserve Bank of Australia Deputy Governor Ric Battelino said policymakers would need to contain inflation generated by a mining boom. The Aussie sat at USD0.9012 at 0956 GMT.