The British pound under performed both the Euro and US dollar today on concerns that the next big subprime blowup could be in the UK. There has also been talk that a UK hedge fund or insurance company could be in trouble.
The Bank of England also confirmed that a UK bank (possibly Barclays) used the standby facility at a penalty rate of 6.75 percent to cover a shortfall in funding. This is the first time that the emerging lending facility has been tapped since the beginning of the subprime crisis. As the problems grow, so will expectations that the Bank of England will keep interest rates unchanged for the remainder of the year.