Pound liquidation continued unabated for the second day in a row , as traders absorbed the details of the UK rescue plan and grappled with the massive losses posted by RBS. Many of the market participants are coming to a creeping realization that the UK banking sector may have to be nationalized as a result of the recent events.

Not a pleasant start of the week for pound bulls with cable crushed on the open of London trade, falling nearly 300 points from the day’s high in response to the second version of the UK rescue plan of its banking sector. The plan announced by UK Chancellor of Exchequer Alistair Darling proposed creating an insurance scheme to underwrite the toxic debts on the books of UK banks. The scope of the program could reach 50 Billion pounds. Additionally UK authorities increased the government stake in RBS to 68% from present 58% share. UK PM Gordon Brown went out of his way to criticize the RBS management, noting that the bank was wholly irresponsible it its investment decisions and that most of its losses came from its exposure to US mortgage backed securities as a result of RBS’s acquisition of ABN-Amro.