Pound slides against dollar

Business Materials 22 July 2008 22:46 (UTC +04:00)

( AFP ) - The pound slid against the dollar on Tuesday after an official from the US Federal Reserve indicated interest rates could be set to rise even further.

In a speech, the head of the Philadelphia Federal Reserve Bank, Charles Plosser, warned that a hike in US interest rates was unavoidable in the short-term in the face of inflation pressures.

Meanwhile, Bank of England governor Mervyn King made no comment on monetary policy while speaking to MPs on the Treasury Select Committee.

Markets will now be looking to Wednesday's release of minutes from a meeting of the bank's Monetary Policy Committee two weeks ago when interest rates were left on hold at 5.00 percent.

Most expect that David Blanchflower will be seen to have been the only member advocating a rate cut and attention will focus on whether the majority is more inclined toward higher rates to counteract soaring inflation or to lower rates because of fears the economy could be heading for recession.

Sterling 1600 GMT Monday close

US dollar 1.9906 A down from 2.0026

Euro 1.2619 A up from 1.2570

Yen 213.55 A up from 213.13

Swiss franc 2.0540 A up from 2.0372