sterling

The Bank of England has revealed it is in talks with the People's Bank of China over a currency swap deal that could help ensure greater financial stability.

Goldman Sachs has taken Barclays off its buy list following the unveiling of the bank's restructuring plans last week, pushing additional pressure on its shares.

The pound has moved towards a year low today against the dollar, its recent weakness having been exacerbated by the revelation BoE governor Sir Mervyn King voted for further stimulus this month.

Hedge fund giants are said to be preparing to short sterling after it fell to its lowest level against the dollar since July this week.

Hedge fund managers have been increasing their short positions in sterling amid fears the currency is set to depreciate further as investors flock to the euro.

UK CPI inflation stood at 2.7% for the fourth consecutive month in January, but fears over longer-term forecasts sent sterling to a six month low in early trading.

The pound has fallen to a fresh low below €1.20 for the first time in over nine months.

HSBC says sterling will weaken this year as it faces a "triple cocktail" of potentially destructive factors from China, the US and the eurozone.

Benchmark 10-year gilt yields have moved back above 2% for the first time since last May as the equity rally is mirrored by a sell-off in core government bonds.

RBS currency analysts have said selling sterling against the US dollar represents a "top 2013 trade" as the pound rises to a ten-week high.