The British pound fell sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6230 level and was capped around the $1.6455 level. Concerns that U.K. banking giant Lloyds may be experiencing a liquidity shortfall weighed heavily on sterling. Bank of England Monetary Policy Committee member Miles was quoted as saying We may get a couple of quarters pretty soon of very small increases in GDP. If you take that technical definition, we might be out of the recession in six or nine months. BoE also reported U.K. lenders are not seeing any significant increase in demand for new business loans. Data released in the U.K. today saw CML August average gross mortgage lending off 13% at ?12.6 billion. Prime Minister Brown today called for the immediate establishment of crisis management groups to manage troubles at multinational banks. Group of Twenty officials convene in Pittsburgh next week. Other data released in the U.K. today saw the M4 money supply increase 0.1% m/m and 12.6% y/y while August public sector net borrowing improved to ?16.1 billion from ?8 billion in July. Cable bids are cited around the US$ 1.6030 level. The euro extended recent gains vis-à-vis the British pound as the single currency tested offers around the ?0.9055 level and was supported around the ?0.8955 level.
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