British Pound dropped almost 3% under 1.50

The British pound dropped sharply under 1.50 against the US dollar for the 1stt time from 2002 on Wednesday after the Bank of Englands periodical Inflation Report, in which they improved both their escalation and price rises predicts considerably lower. The BOE’s estimates forecast that the UK financial system is going to contract throughout 2009 and CPI is going to fall “well below” the governments two percent goal and could even drop negative, indicating deflation, if not it cuts rates additionally. Consequently, Credit Suisse overnight index swaps have moved to nearly entirely price in a 50bp rate cut by the BOE throughout their next conference on December 4, but this may move even more in imminent weeks as BOE Governor Mervyn King stated that interest rates may drop much lower from present stages, and declined to exclude cutting rates to zero.