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Bad British Banking News Risks the Pound

Lloyds TSB, the biggest mortgage bank in Britain, was nationalized this weekend by the British government. This is bad news for the British Pound.

HBOS “inherited” the bad assets to Lloyds, and now it pays the price. The British government now guarantees the banks money, but the bank, which was once successful, is now in the hands of the government. Here’s someone who doesn’t like it at all, calling it the “biggest bank robbery in British history”.

This is bad for the British Pound. Traders don’t like these moves of bank nationalization. Two weeks ago, the US dollar plunged on fears of nationalization.  CitiGroup and Bank of America were then on the American government’s watch.

The British economy is deeply suffering from the global economic crisis, especially due to its big financial sector that is now getting more bruises.

Bad Banking news isn’t exclusive to Britain this weekend: In Georgia USA, the Freedom bank isn’t free anymore. It has been closed by the government, being the 17th bank to be closed in America since the beginning of the year.

Also in Europe, new bad news comes from banks in Belgium, but in a smaller magnitude.

The big news of nationalization in Britain might cause a bad start for the pound, which showed some relative strength last week.

Will there be a weekend gap in GBP/USD?

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.