Credit Suisse overnight index swaps may be pricing in just over 75bps worth of rate cuts by the Bank of England over the next 12 months, but given its sharp shift from pricing in 116bps worth of cuts just last week, the British pound managed to rally over 300 points against the greenback.
Indeed, the move came despite dismal UK economic data, as the Rightmove house price index fell negative for the fourth consecutive month in September, which signals a potential housing recession that will rival only that of the US. That has mattered little to traders though, as the financial crisis appears to be taking a much harder toll on the US, and thus, leaves the odds in favor of further GBP/USD gains. Check out Daily Fundamentals in its entirety for analysis and outlooks on the US dollar, euro, British pound, Japanese yen, and the commodity dollars.