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UK currency under severe pressure as debts begin to mount

After a very brief recovery on the currency exchange over the last few days the pound has encountered some serious selling pressure today falling to a seven-year low against the dollar. There is concern amongst traders and investors that the constant drip feed of taxpayer's money into various rescue packages is severely weakening the power of the UK and investment prospects.

The banking sector also came in for a renewed bout of selling pressure today with Lloyds TSB shares falling by around 50% early in the day only to stage a late recovery. Barclays bank was also another of the major UK institutions under serious pressure as speculation regarding substantial write-offs continues to mount.

If we look back only a couple of months there was hope in the currency and stock markets after Gordon Brown announced a revolutionary idea to allow the government to take substantial stakes in the U.K.'s leading banks. However, the tens of billions of pounds poured into the system in exchange for shares has now turned sour and the substantial banking stakes are now worth only a fraction of the amount invested.

The government is fast running out of ideas to refloat the economy which is affecting both the currency market and the stock market.

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