Pound at new 22-month low
Sterling's slide gathered momentum on Friday as a rapidly deteriorating technical backdrop and growing expectations of UK interest rate cuts pushed it to a fresh 22-month low against a buoyant dollar.
Dollar hovers near record lowThe pound fell below $1.86, one of the relatively high-yielding currencies bearing the brunt of the dollar's resurgence amid concern Britain will be among those major economies that could fall into recession.
Interest rates markets now expect the Bank of England to cut rates, currently 5 percent, by a quarter percentage point by the end of the year and probably again by February.
Sterling's weakness contrasted with the latest upswing in the dollar to a seven-month high against a basket of currencies.
A growing number of analysts now say the dollar may be definitively emerging from a seven-year downtrend during which it shed as much as 40 percent of its value.
"It's not been a good week for sterling but today it's more of a strong dollar story," said Paul Robson, currency strategist at RBS Global Banking.
"Clearly, the Bank of England Inflation Report (on Wednesday) triggered the latest round of selling (this week) ... and there's an increasingly probability that the BoE could cut rates this year and will almost certainly continue to cut through 2009."
At 8.45 a.m., the pound was down 0.7 percent on the day at $1.8552, its lowest since October 2006.
Sterling also slipped against the euro, which was up a slender 0.1 percent at 79.38 pence.
The extent of the sterling's decline against the dollar in recent weeks has been eye-watering: down over 6 percent so far this month and on track for its steepest monthly fall since January 1997.
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