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Markets Selling Stg After London Blasts


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Currency markets have been selling the pound following media reports of several explosions on London Underground and a London Bus.

Fatalities have been reported after explosions hit at least five Underground stations in London this morning.

Reports of explosions on a number of buses across the city have also been confirmed by police.

Stations at Aldgate, Edgware Road, King's Cross, Old Street and Russell Square are thought to have been hit by the initial explosions. The cause is unknown, but British police initially suggested a power surge was to blame.

Niall Dunne of Ulster Bank says that while it is not yet clear the cause of these explosions, which may or may not be linked, the market's reaction has been to sell the pound.

However, the Bank of England's rate-setting body will go ahead with the announcement of its interest rate decision at midday as usual despite blasts, a spokesman for the central bank said.

Though the spokesman said the Monetary Policy Committee schedule remains the same as usual, he would not discuss whether the nine-member panel had been made aware of the news.

Even with up to date information, Bank watchers continue to expect the BoE to keep its key repo rate on hold at 4.75 pct.

Ross Walker, economist at Royal Bank of Scotland, said the MPC does not react to short term things be it data or events. "They will continue as usual unless the circumstances pose immediate danger," he said. "No immediate action from them is likely, they would not want to panic the market."

"If need be they can always reconvene in a few days time," he added. A few days after the terrorist attacks on New York and Washington on Sept 11, 2001, the US Federal Reserve cut the cost of borrowing in the US, sparking off a round of rate cuts.

Edited by Ritters
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