Pound Sterling and the Euro Fell against the U.S. Dollar

Both the Euro and Pound Sterling fell more than 2% against the U.S. Dollar today as the repercussions of the financial crisis was felt across the Atlantic, prompting the nationalization of some banks in Europe.

Shares in Europe fell sharply, even though the hard fought U.S. bailout plan of $700 billion is to be approved later today.  The U.S. Dollar surged against the Euro as major countries in Europe, including Belgium, Luxemburg and Holland, nationalized banks and the insurance group, Fortis.  These countries have also plan to inject into the financial sector, approximately 11.2 billion Euros.  The financial problems were also felt in Iceland as the government nationalized its third largest bank, Glitnir.

The U.K. authorities nationalized mortgage lender Bradford & Bingley, causing the Pound Sterling to drop against the U.S. Dollar, the biggest one-day percentage drop.  B&B’s retail activities and deposits were acquired by Spanish bank, Santander.

According to most analysts, the latest developments confirm that the financial problems are not confined to the U.S.

At 11:00 GMT, the Euro had dropped by 1.8% against the U.S. Dollar to $1.4347, having dropped earlier by more than 2% to a ten day low of $1.4301.  Pound Sterling fell to a ten day low of $1.7962, which is also the biggest one-day percentage drop since mid-1993.