''The British pound sharply reversed after another failed attempt at the 20-day SMA dropping below 1.4200. The Sterling after its recent rally was punished by the flight to safety despite an unexpected improvement in the PMI manufacturing reading to 35.8 from 34.9. Barclay's had its long-term debt rating downgraded which added to the banking fears and sunk equity markets. The BoE is expected to lower its benchmark rate by 50 bps on Thursday, which may add to the pound's weakness. The central bank has been given approval to take quantitative easing measures by Prime Minster Gordon Brown and may outline additional measures following the rate decision. Therefore, we may see the sterling test 1.400 with a break below there leaving 1.3500 as the next target. However, given the unexpected improving fundamental data from the country, the pound may be the biggest beneficiary should risk appetite return.''
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