The British pound fell against the other major currencies today, most notably against the euro, as the market participant expect that the Bank of England will continue reducing the interest rates for the U.K. banks.
Not only the expectations for the lower interest rates press on the pound, but also the commentaries by the monetary officials, stating that the rates as the policy tool are not enough, hurt the pounds position on the global currency market. The Great Britain pound is now very close to the parity rate with the euro — only 5 pennies away from it.
The current bank rate set by the Bank of England at 2 percent is already lower than the Eurozones 2.5 percent interest rate. Some analysts expect a cut by 50 to 100 basis points at the next BoE meeting on January 8. Traders believe that there are no strong reasons for the pound to go up in the near future and the parity with the euro will be seen very soon.
EUR/GBP rose from 0.9316 to 0.9500 as of 11:10 GMT today, still below its record high 0.9555 set last Thursday. GBP/USD fell from 1.4948 to 1.4736, while GBP/JPY declined from 133.37 to 132.46 today.
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