In a single week we’ve seen Barack Obama win the race to the White House and the Bank of England throw caution to the winds with an unprecedented 1.5 per cent cut in UK interest rates by its Monetary Policy Committee.

In a way the two events are linked.

Republican candidate John McCain had his nose in front until it was impossible for him to maintain any longer that the worst of the global banking crisis was over. It was at that point his Democrat rival began to pull ahead.

The Governor of the Bank of England Mervyn King has likewise been forced to make public reassessments of the gravity of the credit crunch.

Now it is recession which threatens the UK and not inflation as he was continually warned by his own MPC member super-dove David Blanchflower and the Daily Express among others.

His conversion is welcome however late in coming. More interest rate cuts are in the pipeline and hopefully the Government will do the necessary arm-twisting to make certain that the high street banks pass on the benefit of lower rates to their customers.

Simon Hayes, UK economist of Barclays Capital, told clients after Thursday’s news that the cost of borrowing had been slashed to 3 per cent: “We now forecast half-percent cuts in each of December, January and February.

"Moreover, if there is not a discernible improvement in credit markets over the next few months we see Bank Rate being cut even lower: zero is the only effective lower bound.”

Sterling will be the barometer by which the UK’s economic climate will be judged in the months ahead. It is likely to weaken against the dollar and the euro as our interest rates fall.

But if the housing market and consumer spending are stimulated by cheaper borrowing rates, the economy should respond.

This should in turn put some backbone into the pound’s value.

There are a lot of “shoulds” in this analysis. But we are moving into unchartered waters.