The Great Britain pound dropped to the lowest rates in several years against the dollar and the yen and the weekly low against the euro today after the BoE Governor Mervyn King said that the recession is very likely due to the worst banking crisis since World War I.
The pound fell to the lowest level since September 2003 against the U.S. dollar as the investors expected the first year with the negative GDP change in more than 17 years. Traders also react on the expectations of the minutes of the last interest rate meeting by the Bank of England that will be released today.
The traders also expect that the current interest rate of 4.5 percent will be cut soon; the total cut may reach 2 percent in one year. A return to $1.5 per pound rate doesnt look improbable now.
GBP/USD fell from 1.6694 to 1.6298 as of 8:28 GMT today, reaching the daily minimum at 1.6203. GBP/JPY declined from 167.53 to 161.55 today, losing more than 3.5% in a single trading session and reaching the lowest level since December 2000. EUR/GBP rose from 0.7820 to 0.7904 today.
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