Sterling tumbled another two cents against the dollar on Monday and weakened against the euro exchange rate as foreign exchange traders speculated the Bank of England may deliver an emergency cut in interest rates and as investor’s poured money into the US dollar.
By Rosie Murray-West and Jamie DunkleyLast Updated: 7:29AM GMT 27 Oct 2008
Full story visit The Telegraph
The pound to dollars fell to almost $1.56 in early trading and slid to almost 80p versus Europe's common currency as what one expert called a "currency market tsunami" continued to sweep the foreign exchange markets.
The weakness in sterling leaves the currency 13pc lower against the dollar this month alone as expectations that the UK economy is now facing a severe recession becomes the mainstream view. News on Friday the economy contracted 0.5pc in the three months to September sent the currency tumbling almost 9 cents at one point.
The increasingly bleak news from the economy is putting pressure on the Bank of England to cut interest rates before its schedule meeting next month.
Dr Lyons, chief economist at Standard Chartered, said: “The economic data available to us shows that the UK economy is crying out for a further cut in the rate of interest. Mervyn King’s comments last week suggest that the Bank of England will do that at its next meeting, but I think action needs to be taken immediately.
However he added: “I don’t expect this to happen, though, and think we will need to wait until the Monetary Policy Committee’s next meeting in November.”
Pounds to Euros currently 1.2400
Pounds to US Dollars currently 1.5418
Pounds to Australian Dollars currently 2.5283
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