King’s tone fires hopes of early-ish rate cut. Cable lower.

Mervyn King, in a letter to the Chancellor of the the Exchequer Darling, sounded pretty dovish. The Bank of England Governor said inflation will peak at around 5% and “soon.” He is obliged to wrote a letter of explanation when inflation breeches its 2% target by more than 1% and stays there for a further 3 months. The tone of the comments has led to hopes of an early-ish rate cut and this has inturn helped put the puond on the defensive. Cable is off around a cent on the day, presently at 1.7835.