The British pound fell sharply vis--vis the U.S. dollar today as cable tested bids around the US$ 1.9660 level and was capped around the $1.9925 level. The pair reached its lowest level since 26 February on account of two primary reasons. First, Prime Minister Brown was reported as saying Because we've got low inflation, we can cut interest rates. Bank of Englands Monetary Policy Committee is widely expected to reduce its headline repo rate by 25bps to 5.00% on Thursday. Second, Halifax reported house prices fell 2.5% m/m in March the biggest drop since September 1992. Ongoing negative surveys on U.K. house prices suggest the BoE could have room to reduce borrowing costs. Other data released today saw CML February mortgage completions fall to a record low of 49,200. Cable bids are cited around the US$ 1.9605 levels. The euro moved higher vis--vis the British pound as the single currency tested bids around the ₤0.7895 level and was capped around the ₤0.7990 level.
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