Pound Fell vs. USD, Euro before BoE Minutes

The Great Britain pound traded lower before the Bank of England’s release of the monetary policy minutes today. After the release, pound continued to slide down against both the greenback and the euro.

The  U. K. currency continued to trade near a two-year low against the U.S. dollar today and fell for a third day against the euro as the minutes revealed that there was one vote for reducing the interest rates; 7 members including Governor Mervyn King voted for keeping the rates unchanged and one member vote for the rate increase.

The minutes also showed that the Bank of England expects the CPI rate to go up in the short-term, but also moderate significantly after several months as the probability, that the lower oil prices will dictate lower consumer prices, is high.

The pound rose yesterday against the U.S. dollar as the currency experienced a technical correction from the 12-day downside rally. Tim Besley, who voted to raise the rates, also noted yesterday that he expects lower inflation in the next year, cutting some traders’ expectations for the rate cut in 2008.

GBP/USD declined from 1.8668 to 1.8608 as of 8:51 GMT today — slightly more than it managed to gain yesterday, signaling that the current trend is still heading south. EUR/GBP rose insignificantly today — from 0.7920 to only 0.7929 as the euro is quite weak despite the yeasterday’s gains.

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