The pound sterling posted today its biggest drop against the U.S. dollar since May 7 as the speculations that Bradford & Bingley Plc, the largest mortgage lender in U.K., will have to raise more capital, indicated a worsening in the real estate market crisis.
The currency also fell against euro and yen as the investors expected that the Bank of England will show a decline in April U.K. mortgage approvals in its report today.
Market analysts believe that the subprime crisis may get a new birth in U.K. If the housing market will post further declines in price and demand, many country’s mortgage lenders will writing down more losses.
The pound has already lost 0.9 percent to the U.S. dollar this year and 7 percent to euro, as the United Kingdom was hit hardly by the deepening housing slump, meanwhile BoE has proved that it can cut the interest rates in such situation.
GBP/USD dropped from 1.9767 to 1.9623 as of 9:17 GMT today, reaching its daily low near 1.9595. EUR/GBP rose from 0.7871 to 0.7923 and GBP/JPY went down from 208.07 to 205.76.
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