Can the british economy withstand the pressure of the credit squeeze?

Sterling sank to new lows against the euro this morning, hitting a record low further beyond the 80p mark as investors weighed expectations for a UK interest rate cut against steadier euro zone monetary policy.
Surrounded by poor economic data and fallout from the well documented global credit crunch, the B of E is expected to put rising inflation pressures to one side at 12:00pm and opt for a 25 basis point
rate cut from 5.25%.

The ECB's continued focus on above-target inflation is widely expected to result in euro zone rates staying at 4%, a stark contrast to
what is happening with the B of E. The B of E is facing increasing pressure as house prices give way to falling confidence in the economy's ability to withstand pressures created by the credit squeeze.

Right now Interbank is at 1.2469

source IFX