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The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0500 figure and was supported around the $2.0350 level. Technically, today’s intraday low was right around the 50% retracement of the move from $1.9650 to $2.1160 level. Nationwide reported house price inflation should recede to 0% by November 2008 and this follows a week of weaker economic data in the U.K. and a dovish quarterly inflation report. Funding conditions in the U.K. continue to deteriorate as the three-month Libor is now 6.40% with the overnight market rate at 5.86%. Most traders believe the BoE’s MPC will reduce interest rates in 2008 and possibly as early as next month. Cable bids are cited around the US$ 2.0365 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ?0.7170 level and was supported around the ?0.7140 level.
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