Bank of England Forces Pound Down Once Again

The British currency is trading at record low levels versus the euro and the dollar as the national central bank affirmed that the real exchange rates for the pound may have been affected by the crisis, shunning investors farther away from pound-priced assets.
The British Isles started this week’s session with a rather pessimist tone, as the Bank of England affirmed that the long-term rate for its national currency may have suffered a devaluation, since the credit crunch affected the U.K. more than other global economic regions. Apart from BOE’s statement, another event added to the already bearish sentiment towards the British currency, as the Royal Bank of Scotland Group Plc, controlled by the U.K. government, has been targeted by speculators which affirmed that it may be partially sold, suggesting that the credit crunch may have affected another financial institution in the U.K., decreasing attractiveness for the pound even further.
Compared to other currencies, the pound remains very unattractive as it has not been backed by positive fundamentals, like it has been the case with the euro, or commodity linked currencies like the Australian dollar or the Brazilian real. Several reasons are affecting the pound’s outlook, ranging from a growing unemployment in the U.K. to complications in the financial sector, making traders to expect further losses for the British currency.
GBP/USD traded at 1.6182 as of 11:12 GMT from an opening rate of 1.6221 yesterday. EUR/GBP is at a 5-month high trading at 0.9058 currently.

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