The British pound moved higher vis--vis the U.S. dollar today as cable tested offers around the US$ 1.9910 level and was supported around the $1.9760 level. Technically, todays intraday level was right around the 23.6% retracement of the move from $2.1160 to $1.9335. Data released in the U.K. today saw the March PMI services index recede to 52.1 from Februarys 54.0 level, a larger-than-expected decline. Also, Bank of Englands credit conditions survey noted less credit has been available to households and added there has been a corresponding increase in default rates on secured household lending. Most traders believe Bank of Englands Monetary Policy Committee will lower the repo rate by 25bps next week. MPC member Tucker last night said Given this unusual combination of significant downside and upside risks to the medium-term inflation outlook, the broad policy strategy is to offset some but not all of the adverse shock to demand from tighter credit conditions. And to do so by changing Bank Rate gradually and with transparency about that broad strategy. Cable bids are cited around the US$ 1.9605 levels. The euro came off vis--vis the British pound as the single currency tested bids around the ₤0.7820 level and was capped around the ₤0.7910 level.
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