Sterling in 2010

Where is the pound heading? The Bank of England believes its depreciation - helped by the asset-buying scheme which was frozen last week - will prove positive in the time to come. Currently, it sits between the euro's weakness (thanks to the fiscal problems in Greece) and the strength of the US dollar, which is being used as a safety net.

Since EU members have started to talk of providing boosts for Greece to help it out of its deficit problems, the euro has bounced back a little. Yet in the week to 2nd February, speculators bet against the euro in record numbers. Short positions reached around 400,000 according to some reports.

So, are the UK's economic problems as bad as those of Greece? The Bank of England Governor Mervyn King says not, saying that the two countries cannot be compared. Judging by the amount of investor nerves on Greece, one certainly hopes so - the UK needs all the help it can get. A quarter of negative growth is expected for Britain this year.

Stocks Fall in EU and USA

On Thursday (yesterday), stock markets in both the US and Europe experienced sharp falls. Why?

Well, for Wall Street the downer came thanks to unemployment claims figures which were released. They were worse than expected - making investors jumpy about what is going on with the economic recovery. Will it ever gain stability?

In Europe, there were renewed fears about Portugal. Is it going to be the next Greece? Government bonds there fell in demand - and as investors are already nervous about the situation and whether EU stability will be weighed down by Portugal, shares took a dive.

One or two economists reacted to Wall Street's drop by saying that investors had been "spoiled" by gains since March last year and that the market still needs to finish correcting.