06.06.08: Sterling continues to struggle against the euro

Sterling fell heavily against the euro on Thursday,with the B of E's decision to leave borrowing costs at 5% eclipsed by the European Central Bank saying a euro area hike might come as soon as July.
The single currency was on track for its biggest one-day percentage gain since mid-April after ECB President Jean-Claude Trichet shocked markets, saying a hike had been discussed ahead of its decision to hold its interest rates at 4%.
With British borrowing costs still the highest in the Group of Seven
industrialised nations, sterling's yield stayed intact as the B of E stood still, but expectations for further monetary easing and a rapidly deteriorating growth picture have undermined sentiment.
The pound is struggling.
The key focus is the comments from Trichet which are suggesting that euro zone rates may increase while the B of E will have to cut rates later in the year. Sterling has been under pressure all week, due to a tide of weak economic data including contraction in the service sector and stagnating manufacturing activity.
Financial sector jitters were also revived as embattled buy-to-let lender Bradford and Bingley restructured its rights issue and issued a profit warning.
Right now Interbank is at 1.2538 with Natwest offering 1.2091.

source: IFX