Sterling weakened on currency markets after publication of the minutes of last week's Bank of England Monetary Policy Committee (MPC) meeting fanned speculation about further interest rate reductions. The MPC meeting sanctioned a further quarter-point reduction in British interest rates to 5 per cent to prevent inflation from under-shooting the government's 2.5 per cent target. Eight of the nine MPC members voted for the rate cut, strongly arguing that the continuing strength of sterling represented unnecessary tightening of monetary policy.

In yesterday's sell-off, the British currency fell 1.27 cents to $1.53, its lowest rate against the dollar for 21 months, and slipped below the key 3 deutschmarks level, falling two pfennigs to DM2.994. The euro moved up against sterling, putting on 0.44p to 65.35 pence. The pound closed at 82.96p against sterling.