The Great Britain pound fell almost to its recent 2-year low against the U.S. dollar today as the member of the Bank of England monetary policy committee forecasted that the inflation will become less of a problem by the end of 2009.
The pound is currently dropping for the 13th day in a row — the longest losing streak since 1971. According to Tim Besley of BoE, the food and energy prices will slow down to about 2% annual rate growth by the end of the next year. That would allow Bank of England to cut the interest rates.
The weakness of the U.K. economy is only starting to show up according to some investment analysts. Its possible that the GBP/USD currency pair will fall to as little as 1.8 during the next few months.
GBP/USD declined from 1.8616 to 1.8563 today — just a little more than 50 pips above its 2-year low at 1.8512. EUR/GBP rose from 0.7884 to 0.7893. GBP/JPY declined from 205.10 to 204.31 as the Japanese yen benefited from the unwinding of the carry trade positions.
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