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Pound hits 4-1/2 month low vs dollar Reuters The pound fell to its lowest level versus the dollar since mid-August on Monday as investors continue to take a bearish stance on the economy and look to whether the Bank of England will cut rates on Thursday. The pound has fallen to all-time lows versus the euro and retreated from the psychologically key $2 level against the pound as a series of weak economic data has piled pressure on the Bank of England to cut rates. All eyes will be on the Bank's Monetary Policy Committee meeting on Thursday with opinion split on whether it will cut rates from 5.5 percent. "We think sterling will be on the defensive for the rest of the week as we have an interest rate cut pencilled in, though opinion is divided on this," said Daragh Maher, currency strategist at Calyon.
By 8:18 a.m. the pound had fallen as low as $1.9654 <GBP=>, its lowest since mid-August. The euro was down 0.3 percent at 74.57 pence, not far off its highest ever level of 74.93 pence set on Friday <EURGBP=>. Most economists expect the Bank to hold rates steady at 5.5 percent after last month's quarter point cut, according to a Reuters poll with just 12 of 63 economists predicting rates will fall this week. However, two interest rate cuts are fully priced in by the futures market by June and another by end-year.
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