Pound Trades Near Record Low Against Euro

The pound traded near a record low against the euro after the Bank of England cut its main interest rate a quarter-percentage point and the European Central Bank stayed on hold.
TradingEconomics.com, Bloomberg 4/10/2008 7:00:44 AM

The U.K. bank's nine-member Monetary Policy Committee, led by Governor Mervyn King, reduced its main rate to a 15-month low of 5 percent amid a housing-market slowdown that's threatening the wider economy. Fifty-two of 61 economists surveyed by Bloomberg News predicted the decision. The ECB held its key rate at 4 percent today to quell inflation.

The pound traded at 80.12 pence per euro by 1:16 p.m. in London, after earlier dropping to a record of 80.29 pence, from 80.10 pence yesterday. It may fall to 82 pence in the next month, Cole forecast.

Britain's currency slipped to 198.69 yen, from 201.15 yen, and declined 0.9 percent to 1.9627 Swiss francs, the lowest level in three weeks. It rose to $1.9814, from $1.9758 yesterday.

Signs the U.K.'s decade-long property boom may be coming to an end stoked speculation the central bank would lower rates today. The average cost of a house fell the most since 1992 last month as banks restricted home loans due to a lack of confidence in credit markets, HBOS Plc, the nation's biggest mortgage lender, said this week.

The pound's decline may be limited on speculation the U.K. central bank will now switch its focus to curbing inflation rather than lowering borrowing costs to spur growth. Price growth in Britain quickened to the fastest pace in nine months in February.

Pound Trades Near Record Low Against Euro