Sterling fell to a two-week low versus the dollar yesterday after dovish minutes from the Bank of England showed a unanimous vote to begin unconventional monetary easing measures. The Bank of England cut interest rates to 1% last month, however the minutes have suggested that a further interest rate cut will take place.
In the US, minutes from the Fed’s last meeting showed central bankers are growing increasingly concerned about a deepening recession. The FOMC now predicts that the US economy may contract by 0.5%- 1.3% this year, much worse than previous forecasts made in October.
Official figures released showed that US housing starts and building permits plummeted to record lows last month. Meanwhile, the number of permits issued for new buildings also fell to an all-time low, down 4.8% to 521,000 units. The data was announced on the same day as news that President Barack Obama’s plans to deal with the housing crisis and reduce foreclosures will help as many as 9m borrowers. Obama unveiled the $75bn plan in Mesa, Arizona, a suburb of Phoenix yesterday.
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