The British pound came off vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.9810 level and was capped around the $1.9975 level. Data released in the U.K. today saw January service sector output climb 0.6% m/m. Bank of England Governor King spoke today and reported policymakers cannot allow the U.K. economy to slow too much but also said the central bank cannot permit inflation expectations to persist too long. King reiterated the BoE sees inflation falling back to target in 2009 when commodity prices stabilize. Other data released today saw Q4 worker productivity climb 1.7% y/y while unit wage costs were up 2.7% y/y in Q4. Additionally, the U.K. government deficit registered 2.8% of GDP in 2007, up from 2.5% in 2006. It was also reported that Hometrack house prices were off 0.2% m/m, the sixth consecutive decline. Cable bids are cited around the US$ 1.9605 levels. The euro gained ground vis-Ã -vis the British pound as the single currency tested offers around the ₤0.7980 level and was supported around the ₤0.7895 level.
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