Fundamentals

The comments from MPC member Blanchflower will reinforce near-term UK economic fears with key UK events later this week.

The UK currency recovered some ground against the Euro on Friday, but there was further evidence of tough resistance on any move towards the 0.79 level while Sterling was unable to regain the 2.00 level against the US currency.

MPC member Blanchflower made a very negative assessment in comments over the weekend with a warning that the economy was probably already in recession. He also called for interest rates to be cut substantially from current levels to avoid an even deeper downturn. The latest housing data also remained weak with the Rightmove organisation reporting a 1.8% decline in house prices for July.

The UK currency was undermined by the data and Banchflowers comments with a renewed decline towards the 1.99 level against the dollar on Monday while Sterling also lost ground against the Euro with lows around 0.7975.