The pound started another day losing versus the dollar and the euro in the European session as the Bank of England affirmed that the 2 percent inflation target won’t be met, raising concerns regarding the British economy’s health.
The yen was one of the biggest winners today versus the pound, after Bank of England Governor Mervyn King stated that it will take time for the Great Britain banking sector to recover from the current delicate situation, lowering traders’ bets that interest rates will be raised this year in the United Kingdom. The current recession and credit shortage in the British Isles are likely to set the monthly inflation below the 1 percent barrier, indicating the seriousness of the British financial system situation. It is unlikely that the Great Britain will initiate a substantial recovery before 2010, which weighs massively on the pound.
The previous week rally for the British currency was almost entirely pared as international news, mainly from China, and grim speculations domestically annulled the pound’s chances of continuing to climb further. Due to a extremely liberal credit pre-crisis credit system, the British Isles are being one of the must punished regions in the world with the consequences of the global slump.
GBP/USD traded at 1.6441 as of 10:44 GMT from yesterday’s rate of 1.6457. EUR/GBP climbed to 0.8603 from 0.8574 yesterday.
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