Sterling languishes near record lows vs euro
Sterling held near record lows versus the euro on Thursday as investors looked to UK credit and housing data for clues on how soon the Bank of England is likely to cut interest rates again.
A run of weak data, particularly from the housing sector, has helped cement expectations that the Bank will follow December's unanimous rate cut to 5.50 percent with more easing in 2008 - starting perhaps as soon as next week.
That has put pressure on sterling which had previously been a popular buy with yield-hungry investors.
"At the moment sterling is very weak and there are building expectations of interest rate cuts in the year ahead, with roughly about 50-50 chance of a cut in January priced in (by markets)," said Lee Hardman, currency economist at BTM-UFJ.
By 0813 GMT, the euro was steady at 74.29 pence having climbed to 74.50 pence the previous session for the first time since its 1999 launch.
On the BoE's trade-weighted basis, the pound opened at 96.80, matching Wednesday's four-year low.
However, the pound managed to make a bit of progress versus a broadly weaker dollar, edging up to $1.9791, as investors bet that U.S. rate cuts would be deeper than UK ones.
The BoE's credit conditions survey for the fourth quarter is due at 0930 GMT, followed by the Land Registry's November house price index at 1100 GMT.
"Although the credit conditions survey's short history makes interpretation difficult, significant evidence of tightening lending standards or falling demand for loans on the part of consumers or businesses would significantly raise the risk of a cut next week," RBC Capital Markets said in a research note.
Source Supplied by Reuters