Forex: Sterling, Euro Crash On Rate Outlook
Just when you thought Tuesday was bad enough, sterling and the euro have started Wednesday having a very bad day at the office.
The euro fell below $1.28 for the first time since November 2006 and the pound tumbled to a five- year low on speculation European central banks will cut interest rates as the global economy heads for a recession.
The euro fell to $1.2743 before trading at $1.2874 as of 9:20 a.m. in London from $1.3063 late yesterday in New York.
The pound dropped as low as $1.6203, the lowest since September 2003, and traded at $1.6295 at 9:20am BST, from $1.6706 late yesterday. It also declined for a third day against the euro to 79.06 pence from 78.17.
Investors bet the European Central Bank will lower borrowing costs by another 0.75 percentage point by June after cutting the main refinancing rate by a half-percentage point to 3.75 percent on Oct. 8, part of coordinated reductions by major central banks.
The British pound fell for a fourth day against the greenback after a report yesterday showed U.K. manufacturing confidence dropped to its weakest level in almost three decades.
The minutes of the most recent BoE MPC meeting are due for release at 9.30am London time and could provide further downwards impetus for the pound. Last night BoE Governor Mervyn King said that "it now seems likely that the U.K. economy is entering a recession."
The euro fell below $1.28 for the first time since November 2006 and the pound tumbled to a five- year low on speculation European central banks will cut interest rates as the global economy heads for a recession.
The euro fell to $1.2743 before trading at $1.2874 as of 9:20 a.m. in London from $1.3063 late yesterday in New York.
The pound dropped as low as $1.6203, the lowest since September 2003, and traded at $1.6295 at 9:20am BST, from $1.6706 late yesterday. It also declined for a third day against the euro to 79.06 pence from 78.17.
Investors bet the European Central Bank will lower borrowing costs by another 0.75 percentage point by June after cutting the main refinancing rate by a half-percentage point to 3.75 percent on Oct. 8, part of coordinated reductions by major central banks.
The British pound fell for a fourth day against the greenback after a report yesterday showed U.K. manufacturing confidence dropped to its weakest level in almost three decades.
The minutes of the most recent BoE MPC meeting are due for release at 9.30am London time and could provide further downwards impetus for the pound. Last night BoE Governor Mervyn King said that "it now seems likely that the U.K. economy is entering a recession."