Sterling hits 1-1/2 yr low as more BoE cuts eyed
Sterling slid to a 1-1/2 year low on a trade weighted basis on Thursday, a day after the Bank of England said policymakers were united on this month's rate cut, fanning talk of another move as soon as January.
Analysts had expected that three of the nine policymakers had been against the cut to 5.50 percent due to concerns about inflationary pressures.
The fact that all had instead focussed on prospects for slowing growth reinforced expectations of another rate cut in the first quarter of 2008, and raised the possibility of such a move coming as soon as January.
"The MPC minutes, as far as the market is concerned, have given the very strong green light that rates will be coming down in Q1 and probably fairly decisively beyond there, and sterling is continuing to lose momentum," said Jeremy Stretch, strategist at Rabobank.
He said he now saw an around 30 percent chance of a rate cut as soon as January, up from only around 10 to 15 percent before the minutes.
Sterling opened at 99.40 on the BoE's trade weighed measure - its lowest level since May 2006 and down 0.4 pct on the day. The index is now down 4.6 pct since the start of the year, on track for its biggest annual fall in percentage terms in over a decade.
The pound also set fresh three-month lows versus the dollar at $1.9881 after slipping below the psychologically key $2 mark on Wednesday.
The euro was up 0.1 percent by 0833 GMT at 72.05 pence.
Thursday sees the final release of UK third quarter economic growth data at 0930 GMT, which is expected to be confirmed at 0.7 percent on the quarter and 3.2 percent on the year.