The British pound moved sharply higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5280 level and was supported around the US$ 1.4805 level. Sterling extended recent gains despite weaker-than-expected U.K. economic data. First, December annual British Retail Consoritum shop price inflation came off to 0.5% from 2.7% in November, the lowest print since September 2007. Second, VocaLink reported December annual growth in take-home pay fell to its lowest level in nearly a year at 2.9% from 3.5% in November. Third, the number of U.K. workers obtaining work and demand for workers fell last month at its sharpest rate since at least 1997. The REC permanent job placement index fell for a ninth consecutive month to 28.6. Bank of England’s Monetary Policy Committee is expected to reduce interest rates tomorrow by at least 50bps. Chancellor Darling indicated the U.K. is far from through with the current recession and it is expected the economy could contract between 0.75% and 1.25% this year. Cable bids are cited around the US$ 1.3920 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8960 level and was capped around the ₤0.9175 level.
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