The British pound came off sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.3955 level and was capped around the $ 1.4295 level. The big news in the U.K. today was HSBC’s announcement that it may need to raise ₤12.5 billion to shore up its capital base through a rights offering. Data released in the U.K. today saw the February PMI manufacturing survey print at 34.7, down from 35.8 in January. Also, BoE reported January total U.K. consumer lending grew ₤1.1 billion in January, down from ₤2.1 billion in December and the weakest rate since 1993. Most traders believe Bank of England will reduce its main interest rate to 0.50% on Thursday. The bigger news, however, will be the expected announcement that the central bank will begin to aggressively conduct unsterilized asset purchases to expand its balance sheet. BoE Deputy Governor Gieve retired on Friday and he indicated the key interest rate will need to be raised before it is obvious on the street that the economy is getting better. Cable bids are cited around the US$ 1.3340 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9010 level and was supported around the ₤0.8810 level.
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