The British pound depreciated sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.3860 level and was capped around the $1.4440 level. Cable reached its lowest level since June 2001 as trades priced in a sharp further deterioration in the U.K. economy. Increasing concerns over the troubled U.K. banking sector dent confidence in sterling. Royal Bank of Scotland yesterday announced the largest loss in U.K. corporate history. Data released in the U.K. today saw December headline consumer price inflation decline to 3.1% in December from 4.1% in November, the steepest decline since April 1992. These data were above expectations but most traders believe Bank of England’s Monetary Policy Committee will continue to ease interest rates. U.K. offers are cited around the US$ 1.4810 level. The euro gained significant ground vis-à-vis the British pound as the single currency tested offers around the ₤0.9325 level and was supported around the ₤0.8960 level.
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