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Pound falls to 80p against the euro Julia Kollewe Sterling bounced back this morning after hitting a record low of 80p against the euro earlier, with stronger-than-expected industrial production figures denting hopes of a half-point reduction in interest rates tomorrow. Economists expect, on balance, a 25 basis point rate cut from the Bank of England when it concludes its two-day meeting at lunchtime tomorrow, and the relatively strong output data reduced the chances of a bigger move. Industrial production increased by 0.3% in February, three times as much as predicted by City economists. Manufacturing output was also higher-than-expected, and climbed 0.4% between January and February. Sterling rose to $1.9717 on the news, from $1.9684 before the figures were released.
Earlier, sterling fell to a record low of 80p against the euro after a slump in consumer confidence added to a gloomy picture of the economy and boosted expectations of rate cuts. Sterling recovered to 79.70p after the industrial output data. "They are pretty good figures, it's a bit of a surprise. It's quite clear that manufacturers are dealing with how strong sterling has become versus the dollar for now," said Neil Mellor, currency strategist at Bank of New York Mellon.
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