Sterling falls to all-time low vs. euro

Reuters
Friday, February 29, 2008

The pound fell to an all-time low versus the euro on Friday as sagging consumer sentiment and falling house prices boosted expectations that the Bank of England will soon cut interest rates.

British consumer morale fell to its lowest in more than 13 years in February, a survey showed on Thursday, as people grew more gloomy about the economy than any time since the recession of the early 1990s, a survey showed.

British house prices fell for the fourth month running in February Nationwide Building Society said on Friday.

The market is now pricing in a 50-50 chance of a Bank rate cut by June compared to a one-in-four chance earlier in the week.

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"The pound is frustratingly soft at the moment, the market is quite downbeat on the UK and it is focusing on the bad news," said Geoff Kendrick, currency strategist at Westpac.

He added that bank writedowns earlier in the week had added to the soft tone on the pound.

Halifax Bank of Scotland and Royal Bank of Scotland both reported increased writedowns due to exposure to the subprime credit market.

At 8:43 a.m. the euro touched 76.54 pence, its highest since the single currency's inception in 1999 and up 4 percent since the start of the year.

The pound eased 0.2 percent against the dollar $1.9881, even as the U.S. currency hit at all-time lows versus the euro and Swiss franc.

Full article here.

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