FXstreet.com (Barcelona) - The Euro and the British Pound have reversed their respective rallies on increased risk aversion as European and U.S. stock markets drop to five and six week lows respectively plus the gloomy economical outlook for the Euro Area.

European markets have tumbled on Friday on fears of a deep recession ahead and a feeling that the ECB has failed to find a successful plan to dampen the effects of the global economic slowdown. Eurostoxx 50 Index has fallen to lows of 2003, while Wall street has dropped to levels of October 2002, the lowest level seen in the last crisis period.

EUR/USD rally has capped at 1.2647 to drop back to levels below 1.2600 on its way to test support level at 1.2550, reversing most og the ground gained during the European session. Next support level remains at 1.2525, and 1.2512.

GBP/USD is dropping aggressively after having hit intra-day high at 1.4372; the pair is on its way to support level at 1.4270/80 area, with next support level at 14225 (50% Fib ret. 1.5353 to 1.3500).