The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4575 level and was supported around the $1.4320 level. Most traders expect Bank of England’s Monetary Policy Committee will ease interest rates by 50bps tomorrow to 1.00%. Many data were released in the U.K. today. First, the January PMI services survey improved to 42.5 from 40.2 in December. Second, U.K. annual shop price inflation rose to 1.1% in January from 0.5% in December. Third, Nationwide consumer sentiment fell to a record low last month. Fourth, REC reported demand for staff fell at its fastest pace in more than one decade. Some economists are speculating the U.K. economy may have bottomed out. NIESR is calling on the BoE to conduct quantitative easing operations such as purchasing corporate debt. NIESR believes the U.K. economy will contract 2.7% in 2008. Cable offers are cited around the $1.4720 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8840 level and was capped around the ₤0.9075 level.
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