"Unlike the Olympians, our economy has not yet reached full fitness"

This was the view of the Governor of the Bank of England yesterday as he slashed its growth projections to close to zero from about 0.8% predicted only in May.The disappointing figures published indicated no growth for 2012, compared with 2% forecasted a year ago. This has led to calls for an interest rate cut, however Sir Mervyn King has revoked this possibility in the short term. "Another quarter point on bank rate is not going to be the difference between having a recovery and not having a recovery." A rate cut would damage some financial institutions, such as building societies, and therefore would be "more counter-productive than beneficial".

King went on to say that the Bank's forecasts were unable to account for potentially severe knocks that could occur, most likely from the Eurozone crisis. "A black cloud of uncertainty is hanging over investment," he said, adding that a strengthening pound decreases the competitiveness of British exports.

George Osborne admitted that economic growth was "disappointing", but that the government had a chance to "give its 110% attention and effort and energy" to getting it moving. However, Labour's shadow chief secretary to the Treasury, Rachel Reeve, said the government's policies were doing long-term damage to the economy, adding: "It is clear that we cannot go on with the same failing plan from this government."

Sterling performed remarkably despite the news rallying from below 1.26 against the single European currency reaching 1.2665 yesterday and today on the brink of 1.27. It was similar story against the Greenback which is now trading up at 1.5650 from the 1.5565 (pre inflation report) yesterday.

If other news Australian unemployment data came in better than expected over-night, with 14k new jobs created, reducing the overall unemployment rate to 5.2%, this came alongside Japanese Interest rates which as expected remained at 0.1%. As for the rest of this week, tomorrow we have German CPI expected to stay at 2% and Canadian employment to end the week expected to remain at 7.2%.