Even though the British pound strengthened against the US dollar, the rally was modest at best compared to the performance of the other major currencies.
Aside from the US dollar, the pound weakened against all of the other G10 currencies as the outlook for the UK economy deteriorates. Bank of England member Blanchflower confirmed what many Britons fear the most, which is that the UK economy is headed for a recession. Although Blanchflower is typically more dovish than his counterparts, he is right in arguing that the economy will get worse before it gets better. He calls for the central bank to cut interest rates rapidly to prevent a downturn that could be more severe than the one in the U.S. The Bank of England minutes are due for release on Wednesday.
