We are expected to hear from the Bank of England today where it is predicted they will cut the growth forecast from 0.8% to close to zero as the double dip recession takes hold of the country. As the banks continue to feel pressure and remain reluctant to lend money the UK economy fails to show any growth which is likely to be bad news for Pound Sterling exchange rates which could well fall further from the recent highs we have seen. Another key point that could be made today will be whether Mervyn King, Governor of the Bank of England, will mention a possible cut in interest rates. Now a cut in interest rates may be a way off but the mere mention of it could result in Sterling exchange rates falling against most the major currencies. Considering a few months ago many analysts were predicting that revised GDP figures would show we had actually avoided the recession however it appears they couldn’t have been more wrong as the state of the economy appears to get worse and worse. It is only the fact that problems in Europe are so bad that Sterling Euro exchange rates have pushed up to some of the highest levels we have seen in over 4 years, should we start to see some strength back to the Eurozone then we could see GBP/EUR exchange rates fall rapidly.
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