Pound Stops Below $1.5 as Recession Blooms

The Great Britain pound continued to trade below the psychologically and technically important level of $1.5 per pound for the second day today as the recession continued to show up at its worst in Europe and the U.S. rescue plans changed.
The pound went down below the $1.5 rate yesterday — for the first time since June 2002. It now continues to trade below that level, but is up in a daily period. The  U. K. financial sector jobs contracted in October for the second month in a row, indicating serious problems in the economy.
The expectation that the Bank of England may continue with the interest rate reductions if the economy continues heading downward is a major negative factor for the pound. $1.4 per pound isn’t something impossible if the rate will be cut again on the next BoE meeting on December 4th.
The  U. K. currency has already lost 25 percent against the dollar and 12 percent against the euro since the beginning of the year. It may extend its loss to at least 30 percent against the dollar by the end of this year if no real positive news from the financial and real estate sectors come soon.
GBP/USD rose from 1.4854 to 1.4935 as of 9:38 GMT today after declining to 1.4809 — the lowest since June 2002. GBP/USD fell from 1.5378 to 1.4856 yesterday. EUR/GBP reached its all-time high at 0.8412 yesterday.

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