The pound has lost ground to the US dollar this morning, as investors expect the Bank of England to cut interest rates to another record low this afternoon. Sterling has traded in a very volatile fashion this week, alternately undermined by Moody's downgrade of Barclays and buoyed by a slightly less bleak outcome than expected from a round of economic data, including British service sector numbers. Overall though, underlying nervousness at the vulnerable state of Britain's financial sector and broader economy has kept sentiment weak.
A 0.5% rate cut from the BoE has already been priced in, but some investors are speculating that the central bank may cut rates by a full percentage point to stave off a deepening recession.
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