Sterling continued on a downward bias yesterday with the pound remaining above 87p. According to Mr Colin Hunt, economist at Bank of Ireland, the market is now a little carried away with the idea that a cut in interest rates could be coming up at the next meeting of the US Federal Reserve's Open Market Committee on September 29th.

With a technical adjustment, the pound also fell slightly against the deutschmark. As a result it closed at the same level as Monday at 87.3p against sterling and was a little weaker against the dollar at 1.43.

Mr Hunt said that only a threat to Latin America's growth prospects could prompt the Fed to cut rates in the short term, although a cut in the medium term was definitely a possibility..