Sterling plummets on interest rate news
Sterling fell to a five-month low today but shares in London hit this year's high as investors bet interest rates will not go up until 2011.
The pound was down 0.31 cents against the US dollar to $1.5809 and 0.36 euro cents against the euro to 1.0721. The FTSE 100 index rose 61.58 to 5223.45.
It came after a report by the Centre for Economics and Business Research said rates could stay at the record low of 0.5% until 2011 and remain below 2% until 2014.
The report also predicted the Bank of England will ramp its quantitative easing programme — printing money — by £75 billion to £250 billion. This, said the CEBR, could send the pound as low as $1.40 against the greenback and possibly below parity with the euro.
Bank Governor Mervyn King has indicated he is happy for the pound to remain weak in the hope that it will drive exports and boost the economy.
