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THE pound is expected to fall against the mark in the coming days as the Bank of England lowers interest rates to protect UK growth from a global slump.

All but one of the 18 economists surveyed by Bloomberg News said they expect the central bank's Monetary Policy Committee to cut the country's benchmark lending rate by a quarter of a percentage point to 7.00 per cent after its two-day monthly meeting ends on Thursday.

That would be the second rate cut this month, reducing the money-market return on sterling.

"I'm targeting a move down to 2.76 marks [in the pound] next week," said Nick Parsons, senior currency strategist at Paribas Capital Markets.

On Friday, the pound was little changed at DM2.7706 from DM2.7713 late on Thursday, although it is down almost 6 per cent in past two months. It was at $1.6735 from $1.6745.

Interest rates are falling around the globe: the US, Japan, Canada, Denmark, Ireland and Italy, among others, have cut rates in the past two months.

The UK has cut too, though some analysts said the Bank of England should cut more aggressively to protect British growth.

The UK benchmark rate of 7.25 per cent is almost half-again as high as the US's 5.00 per cent and more than twice Germany's 3.30 per cent.

The UK rate has kept the pound buoyed around DM2.77 for the past six days as concerns about slowing economic growth prompted investors to seek the pound's high returns.

Three-month deposits in pounds yield 7.17 per cent, while dollar deposits bring 5.22 per cent, marks 3.60 per cent and yen 0.40 per cent.

"I'd be surprised if sterling remains up here," said Mohamed Sbitri, a currency trader at Gulf International Bank.

The yield on the December sterling interest rate futures contract, a measure of rate expectations, was unchanged at 6.69 per cent. This was far enough below the current three-month borrowing rates to suggest that many traders and investors expect rates will fall as much as a half-point before the end of the year.

Evidence of slowing growth is mounting in the UK. Economic growth slowed to an annual rate of 2.5 pecent in the third quarter from 3.0 pecent in the previous three months.

Company leaders are pessimistic, with a survey from the Confederation of British Industry last week showing confidence in the manufacturing industry falling at its quickest pace in more than 18 years.

The trade deficit is also growing, as a global slump and the pound's 10 per cent gain against a trade-weighted basket in the past two years undermining demand for exports.

"The UK economic outlook has certainly deteriorated recently," said Joanne Collins, a senior economist at Daiwa Europe.

She added that she is convinced that sterling's long-term direction is "clearly down". Copyright: IOS & Bloomberg