An extract from Reuters, as if this comes as any surprise, but for those who are not aware:

"Official preparations to flood the economy with cash may prompt sterling to retest 23-year lows against the dollar and analysts say all graphs point down for the pound if it breaks lower.

The pound has remained resilient in recent weeks but fresh economic headwinds are dictating a new push toward quarter-century lows against a broadly bullish dollar.

The catalyst for that may come when the Bank of England embarks on unconventional measures to keep borrowing costs low, having almost run out of interest rate ammunition to stave off the threat of deflation.

Sterling is already back on the defensive and poised to break below $1.40 as investors await the Bank of England's next rate decision on Thursday, where it is seen slashing rates by another 50 basis points to just 0.5 percent".

Sterling is already back on the defensive and poised to break below $1.40 as investors await the Bank of England's next rate decision on Thursday, where it is seen slashing rates by another 50 basis points to just 0.5 percent".

Good post - but is a 0.5% reduction really "slashing" ? Journalists, hey ????

Baht and Sterling are both weakening , it depends which weakens fastest - and what happens to the $us .

I expect sterling to do a bit better than others over the next 6 months just because they are being more proactive , and therefore may sort out problems before others .

This mass printing of money ( otherwise known in the article above as 'unconventional measures' )was announced as a likely scenario 2 weeks ago and I think the bad news mentioned above, is already factored into the Value of Sterling. This is why, even with the Baht weakening recently, it has stayed roughly the same as the £ over the last 2 weeks.

The £ is greatly undervalued already and won't dip much more.

I don't think we will see much of a dip at all when this all happens... however like churchill i do think the £ will improve slightly over the next 6 months.

I think the interest rate cut later this week by the BOE is already factored-in. I expect to see 1.50 tested by April 5th 2009. I agree with other posters that Sterling will rebound more quickly because of a pro-active approach and more bad news from the USA.

Six months ago, folks that talked of a 50% drop in UK property prices were thought of as heretics, today such people are broadly mainstream - what is scary is that some are now talking in terms of an 80% drop. What has this got to do with Sterling you ask? None basically, but I thought it was an interesting point to make. I'm off to bed now, good night.