This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7070515.stm

The article has changed 9 times. There is an RSS feed of changes available.

Version 0 Version 1
Pound at new high against dollar Pound at new high against dollar
(about 2 hours later)
The pound has risen further against the dollar, trading at its highest level against the US currency for 26 years. Both the pound and the euro have risen to further highs against the dollar, on growing expectations of a cut in US interest rates.
The pound was seen trading at $2.0727 in early trade in London, following data showing that UK house prices rose sharply in October. With the Federal Reserve widely tipped to reduce US rates later on Wednesday, the pound hit a fresh 26-year high of $2.0743 in early trading.
Sterling has also been climbing on forecasts that the US will cut interest rates on Wednesday, while the UK is expected to hold rates next week. Meanwhile, the euro touched $1.4467, its fourth all-time high against the greenback in as many days.
The higher UK interest rate makes the currency more attractive for investors. The value of the pound has been further strengthened by upbeat UK housing data.
Wednesday also saw the US dollar hit a record low against the euro in early trade. US economic woes
"We're on Fed watch but the view is a little murky so trade is likely to be very thin - no one wants to put their head into a buzzsaw," said analyst Edward Meir of MF Global. Analysts said the figures, showing that UK house prices rose sharply in October, made it even more likely that the Bank of England would keep UK rates on hold at 5.75% at its meeting next week.
Many analysts predict that the US central bank will lower interest rates by a quarter of a percentage point on Wednesday, in an bid to mitigate the damage of a housing market slowdown. Dealers are showing no hesitation in selling the dollar against the euro Tsutomu Soma, Okasan Securities.
The Fed cut its benchmark interest rate to 4.75% from 5.25% in September. Taken together with the expectation that the Fed will cut US rates later on Wednesday from the current 4.75%, this makes the pound more lucrative than the dollar for investors.
The Fed is under pressure to reduce US interest rates further to help boost the struggling housing market, amid growing signs of weakness in the wider economy.
It cut its benchmark interest rate to 4.75% from 5.25% in September.
"Dealers are showing no hesitation in selling the dollar against the euro as they think the Fed is likely to go for more rate cuts, even after the one expected today," said Tsutomu Soma, senior manager of foreign securities at Okasan Securities.
Niels Christensen, FX strategist at Nordea in Copenhagen, added: "Everybody is looking for a US rate cut this evening and selling the dollar across the board."
The latest UK house price data came from mortgage lender Nationwide.
It found that house prices rose at an annual rate of 9.7% in October, up from September's 9% gain.