Pound pulled back by OECD
Warnings over the sustained growth that has driven the British economy in the last decade prompted a dip in the pound's fortunes overnight.
The Organisation for Economic Co-operation and Development (OECD) reported yesterday that its growth forecast for this year was being revised from 2.4 per cent to 1.7 per cent, warning Chancellor Gordon Brown that tax rises could be necessary in the coming economic cycle.
This morning the dollar stood at 1.7486 to the pound, while the euro was at 1.4594.
With other economic data corroborating signs that growth could be slowing, as the number of people unemployed also rose, many observers are predicting interest rates will be cut again in the coming months.
BNP Paribas strategist Ian Stannard told Bloomberg: "The jobless figure adds to signs that growth is slowing, and fuels rate-cut expectations. This will continue to undermine sterling.''
The Office for National Statistics said yesterday that there were now 875,000 people claiming unemployment benefit - the highest figure for a year and a half.
Comments from the Bank of England governor Mervyn King that a rate cut was not certain before the year's end failed to prevent the pound from slipping, with analysts now awaiting further clues as to the state of the British economy and the likelihood of a rate cut in the coming months.