The dollar pared gains on Monday as US stocks recovered most of earlier losses following the better ISM US manufacturing index. However, consumer spending recorded an unprecedented sixth monthly decline in December, indicating no signs of an economic recovery. President Barack Obama, warning about further bank write-downs, said the US government will need to offer additional support to the ailing financial sector. Treasury will present the government’s financial-rescue plan next week.
The GBP/USD fell for the first time in six days after Barclays Plc’s credit rating was lowered by Moody’s Investors Service and Prime Minister Gordon Brown indicated the UK has no plans to intervene to support the pound saying targeting the currency’s value proved a “recipe for failure.” On Thursday the Bank of England is expected to cut the benchmark interest rate 50 basis points to 1.00%, the lowest level ever. The GBP/USD is pressured by concerns about the solvency of the UK banking system and public finances amid a UK deepening recession
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