Continuing the decline that began in the summer of last year, pound sterling dropped to a fresh low against the Euro as further rate cuts are anticipated for the UK economy.  Similar to the US and its current dilemma, the British economy continues to show internal weakness as consumer confidence and spending remain weak on housing prices, that have dropped more than 8 percent this year, and rising unemployment.  Labor losses, incidentally, are expected to mount in the hundreds of thousands next year, comparable to US losses.  As a result, the Bank of England is expected to reduce interest rates further, potentially mimicking US counterparts by moving towards a virtually zero interest rate policy.  On the flip side, European officials are keeping speculative interest as policy heads have vowed to keep rates at their current levels until further analysis can be conducted on the effects of recent rate cuts.  The EURGBP currency cross is currently trading at 0.9795 after hitting as high as 0.9805 in the overnight session.

Tags: British Pound

This entry was posted on Tuesday, December 30th, 2008 at 3:53 pm and is filed under British Pound, Currency Trading, Euro. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.