Pound at an all time low against the Euro.

The pound has fallen for the first time in six years against the Euro to a record low of 79.12 p, and to 194.22 yen, the lowest level since January 2005.

After the BOE followed the Fed’s decision to offer extra reserves to banks in order to increase their reserves and overall liquidity gilts have soared.

According to Ian Stannard, a currency strategist at France’s biggest bank BNP Paribas SA said that the Sterling “is coming under a lot of pressure, triggered by the U.S. side of the story, with what’s happened with Bear Stearns and the Fed action, as equity markets are down and all the yen crosses are under pressure today.”

The FTSE 100 Index dropped 2.9 percent to a two-month low, while the Dow Jones Stoxx 600 Index, is down by 4 perecent.

This trend of declining stocks has meant that investors are selling higher-yielding currencies including the pound. Known as carry trade investors they earn the spread between the two interest rates.

On a larger scale the BOE’s decision to provide extra cash to banks, and concern over current credit-market losses the sterling is likely to extend its losses.

As a result of the emergency operation U.K. government bonds declined for a third consecutive day, with two-year yields falling to near the lowest level in 4 1/2 years, whilst ten-year gilt yields slipped 2 basis points to 4.30 percent.

The current fall of the pound is before a government report tomorrow that may indicate that the U.K. inflation has quickened in February, staying above the BOE’s 2 percent target.

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