We dread to even think about the dire headlines on the Evening Standard’s billboards dotted around London tonight. Commuters on their way back to over ground train stations will be reminded of the shockingly bad surge in workers claiming benefits as 138,400 individuals were laid off in February. That number is 63% above the consensus expectation for the month, the fastest rise since 1971 and brings the number out of work to 1.39 million. While the claimant count rose from a 3.9% rate to 4.3% of the labor force out of work, a broader measure used for international comparisons, rose to 6.5% and is the highest since 1997. The pound as a result took a pummeling and again fell to a six-week low against the euro and dollar.

The political backlash continues to mount as the unemployment rate rises to its highest in the 12 years since the ruling Labor Party came to office. During most of that time, Prime Minister Gordon Brown presided over the economy as chancellor of the exchequer and as such is facing staunch criticism for allowing the banking system to take the risks that have landed the economy in such deep waters. Four large names have fallen into government hands and today’s data illustrates the ongoing severity of a rapidly deteriorating situation. That said, the unemployment rate in the United States is 8.1% and compares to 8.2% in the Eurozone. The harsh reality is that ongoing quantitative easing by central banks is taken to be a sign of weakness and is adversely impacting domestic currencies.

Today the pound fell in value meaning Brits need more than 94 pennies to buy a single euro coin. Against the dollar, the pound slumped to $1.3844 at its weakest before adding a cent against the greenback.

The yen weakened above ¥129.15 following a slight increase to the regular amount of corporate bonds the Bank of Japan buys each month. That’s the strongest value of the euro in 2009. The purchases have been in place since 1989 and added around 1.4 trillion yen to the system each month. Following today’s conclusion to its two-day meeting the Bank of Japan stepped up that number to 1.8 trillion or $18 billion. Here’s yet another sign that investors seem skeptical over such actions once monetary policy is fully deployed. The yen is actually a little stronger against the dollar in early morning U.S. trading where the dollar buys ¥98.33.

We’re also watching the ebb and flows of the Swiss franc today. Last week the Swiss National Bank stepped up to the plate and gave its currency a firm thwacking in an effort to depress the currency’s strength especially against the euro. In its fourth session since the announcement traders see no further sign of the SNB and so are buying Swiss against the euro at 1.5317 in the hopes that a retreat to 1.50 will bring out the next charge from the authorities.

Two items weigh on the dollar today. First is the fact that, agree with it or not, equities are steady to broadly higher around the globe in a sign that collective government and central bank action will work. The mere mention of improving status for the financial sector seems to have been enough to germinate the seeds of recovery, at least for now. This turn in investor sentiment has now propelled the euro back above $1.3120 against the dollar and that means that the dollar is at a year-to-date low. The second item weighing against the dollar comes in the form of what the Fed will or won’t say after today’s FOMC meeting.

We know they can’t address monetary policy anymore but investors are waiting for its broad assessment of data since it last met. On this count, we don’t expect anything upbeat despite Mr. Bernanke’s recent announcement that recovery should be with us in 2010. Second, the market awaits clarification as to the Fed’s approach to further quantitative easing. According to some sources there are divergent views on the depth of intervention. Whether we receive any revisions to the Fed’s core view remains to be seen. Again there is a divergence between what they previously said about unemployment topping out at around 8.5% versus the double-digit expectation conveyed over the recent weekend in Mr. Bernanke’s televised interview.