This week- British Bank set to slash rates

The British pound closed last week at a 7 year low against the dollar, ( 1.4500) after the Bank of England reported that U.K mortgage approvals are in its lowest since 1999.

The economic situation in the U.K is pressuring the Bank of England to perform further easing in interest rates.

After it had already cut interest 5 times during 2008, the Bank is expected to cut an additional half percent (from 2% to 1.5%) on its January 8 meeting (this week).

This event will be the main focus of pound trading for the week ahead.

It is hard to tell how much of the interest cut on the pound is already priced in the market, but any surprises from the Bank of England coming Thursday, should create short term trading opportunities on GBPUSD and GBPJPY.