fundamental alert

British Pound Hits Record-Lows Against Euro on Biggest-Ever Decline

Wednesday, 17 December 2008 15:27:25 GMT  |  David Rodriguez, Quantitative Analyst

The British Pound hit record-lows against the Euro on a record single-day decline, as dismal UK Unemployment results and bearish Bank of England interest rate outlook doomed the British currency to further declines. UK Jobless Claims surged by the most since 1991, as the British economy sunk further into recession. All the while, Bank of England Monetary Policy Committee Minutes showed that central bankers overwhelmingly favored further UK interest rate cuts in a bid to keep the British economy from a prolonged period of deflation.

British Pound Hits Record-Low Against Euro on Biggest Ever Decline

The combination of events led to the biggest British Pound drop against the Euro since the Euro’s inception, and extremely pessimistic British economic outlook may keep pressure on the Pound through the foreseeable future. Yet it seems that media attention to British Pound weakness is now hitting a fever pitch, and such extremes in sentiment in fact largely coincide with noteworthy reversals. If we continue to see financial news media headlines such as “British Pound Plummets” or other similarly alarmist headlines, this could potentially mark the peak in the extremely high-flying Euro-British Pound (EURGBP) currency pair.

Written by David Rodríguez, Quantitative Analyst for DailyFX.com
To contact the author of this report, e-mail  drodriguez@dailyfx.com

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