GBP

Would have thought that the markets would have cottoned on to Kings game now but credit to Ashraf (again) for pointing it out.

Is this just a further attempt by King to drive down sterling?

Latest BoE inflation report is dovish!

LONDON, May 12 (IFR)- Cable has slumped by over three-quarters-of-a-cent to a low of 1.4900 on the back of a dovish quarterly BoE Inflation Report. The BoE sees annualized UK CPI under 2.0% in two years if interest rates are held constant ). Annualized CPI is currently running at 3.4%. Bank Rate has been held at 0.5% since it was cut to that level in March 2009. The BoE IR also says that downside risks to economic growth in the near term have increased and that the pace of recovery remains uncertain (BoE website/Reuters).

DJ UK Govt: To Accelerate Deficit Reduction - Source

(This article was originally published Tuesday.)

By Laurence Norman
DOW JONES NEWSWIRES

LONDON (Dow Jones)--The U.K.'s new Conservative and Liberal Democrats coalition government will target a "significantly accelerated" deficit reduction plan as it aims to hold onto the country's AAA credit rating, a senior Conservative source said late Tuesday.
The source said the new administration will set an emergency budget within 50 days which will include plans for around GBP6 billion in spending cuts in the current financial year.
However, in a bid to placate Liberal Democrats concerns that spending cuts could push the fragile U.K. economy back into recession, the source said the exact scale of the cuts will be subject to the "advice" of the treasury and the Bank of England.
The deficit cuts will be the centerpiece of economic policy under new Treasury chief George Osborne.
The U.K. ran a budget deficit worth 12% of Gross Domestic Product in the last financial year, which ended last month, and has faced warnings from credit rating agencies that it could lose its AAA sovereign debt rating if it doesn't step up its debt cut efforts Those warnings took on an extra edge with the debt crisis in Greece.
The new government will use the spending cuts to maintain the Conservative's promise to reverse the previous government's planned increase in employers' payroll tax. It was due to be imposed in April 2011.
However, the new government won't go ahead with the Conservative's plan to reverse the rise in employees' payrolls tax. Instead, the new government will lift the income-tax threshold in April 2011, a key policy promise of the Liberal Democrats, the junior coalition partner, the source said.
The new government will hold as a "long term" aim the Liberal Democrats' promise of lifting the income-tax threshold to GBP10,000 and will raise the threshold in real terms every year.
That aim will take priority over the Conservative's centerpiece plan to raise the inheritance-tax threshold, the source said.
Meanwhile, in a major revenue raising initiative, the new government will hike the capital gains tax paid on non business assets to 40%, from 18%, the Financial Times reported. A Conservative spokesman was not available for comment.
Britain will definitely not join the euro under the new government, the Conservative source said.
He said the coalition government has agreed on an "independent commission" on the structure of the banking system. Among other issues, the commission will look at whether to separate retail and investment banking, something that the Liberal Democrats supported. The Conservatives only wanted to prevent retail banks from engaging in the riskiest type of trading activities.
Meanwhile, the Bank of England will be given "control" of macro-prudential regulation, involving systemic risks to the banking system. It also will have "oversight" of banking supervision.
However, there could be a reprieve for the Financial Services Authority, the source said, with the issue of who performs the bank supervision role still to be decided.
The Conservatives had planned to scrap the FSA.

Why the UK is no Greece: Jim O Neil tells you why he is such a fool!!
http://www.investingcontrarian.com/global/why-the-uk-is-no-greece-jim-o-neil-tells-you-why-he-is-such-a-fool/