The pound recovery came to an abrupt halt yesterday after the release of UK net borrowing figures that showed a significant increase in government debt levels. UK net borrowing for February came out at 21.4bln, up from the £4.3bln seen in January. UK mortgage approvals came out worse than expected adding further pressure to the sterling.

Risk aversion has set back into currency markets as renewed concerns on Greece’s debt situation and weaker US data boost the dollar. Greece stated that given the high cost of borrowing they are having to contend with there is a high risk that the country would not be able to meet its debt reduction targets. In the US CPI inflation data weakened slightly while the country’s current account deficit widened. European market all opened lower this morning before recovering but provided little solace to the pound that is still suffering under market concern over the UK ability to fund its debt. There is no data scheduled for today.