Pound and Euro fall hard: likely to continue

As the currencies take a battering, the pound dropped to the lowest since September 2003 at $1.6203 and traded at $1.6325 from $1.6706, this was its third day loss against the Euro to 78.75p from 78.17p

For the first time since November 2006, the euro dropped below $1.28. The pound and euro taking a battering due to the rumor that the European Central banks will cut interest rates again as the World economy is slipping into recession.

It’s looking likely that both UK and Europe will cut interest rates again as both governments announce they are probably in recession.

As the minutes of the last meeting of the Central Banks are released today at 9.30am in London it’s likely that the pound will continue to decline today. Both UBS AG and Citigroup Inc have predicted the Bank of England will make another emergency rate cut taking the BOE base rate down a further half a percent to 4 percent, the BOE interest rate is set at 4.5 percent after its emergency half a percent cut on October 8.

In Australia the dollar fell 3.9 percent to 66.49 U.S. cents, in New Zealand the dollar slumped to 59.78 cents from 61.45.

Source: Bloomberg