Sterling rises against euro as Bank of England cuts rates
The sterling rose against the euro on Thursday, and steadied from losses against the dollar as the Bank of England cut its interest rate by 1.5 percent. This was the biggest interest rate cut by the bank since 1981 and signals the bank’s concern over a UK recession.
The European Central Bank also cut its interest rates by 0.5%, taking it to 3.25%, meaning that UK rates are lower for the first time since 1999, when the euro currency was launched.
House prices falling and the weakening of the UK economy, has some analysts predicting further rate cuts by the Bank of England before the end of the year. Some have predicted a further 0.25% drop to 2.75% by December with many believing that it will fall towards the 2% mark early next year.