The Sterling trades at a record low versus the Euro

The British pound traded near a record low against the euro as an industry report showed U.K. home sales dropped last month to the lowest level in at least three decades, adding to evidence the economy is in a recession. The sterling slid yesterday to 82.09 pence per euro, the weakest since the debut of the single currency in 1999. The weakening property market is encouraging shoppers to spend less. Retail sales fell an annual 2.2 percent in October, the British Retail Consortium said in a separate report today. The Bank of England cut its benchmark rate last week by 1.5 percentage points to the lowest level since 1955. The 3 percent main rate compares with 3.25 percent in the euro region and 1 percent in the U.S. The GBP/USD is currently trading $1.5620 as of 8:29am, GMT.

The euro and Australian dollar may weaken further, after record slides in October, as concern builds that the world is headed for a prolonged recession, Barclays Capital said. ``Investors need to be careful not to fall into the `value trap,''' David Woo, global head of currency strategy in London at Barclays Capital, wrote in a research report dated yesterday. Currency pairs including the euro-yen, euro-dollar and Aussie- Swiss franc could experience further declines, he wrote, if markets' outlook of a ``relatively benign outcome'' is incorrect. The EUR/USD is currently trading at $1.2765 as of 8:52am, GMT.

The yen rose against the euro on speculation a slump in global stocks prompted investors to sell higher-yielding assets and pay back loans in Japan. The euro fell against the dollar before a report economists say will show investor confidence in Germany was near a record low, supporting the case for interest-rate cuts by the European Central Bank. ``Sentiment is in favor of further yen gains,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``A weak stock market causes a reversal in risk trades, which is supportive of the yen. The euro is vulnerable because the economic outlook points to lower interest rates in the future.'' The USD/JPY is currently trading at 97.75 as of 8:58am, GMT.

Today's Economic Events