September 24, 2007 (LPAC)--Forecasts indicate that the British pound sterling could collapse to $1.547 as early as next year. It traded today at $2.0254 in Tokyo. Deutsche Bank, UBS and Citigroup, the world's three largest currency traders, earlier this year were forecasting a collapse of the pound. Although for the last six months this forecast had seemed false, since the collapse of British mortgage lender, Northern Rock and the Bank of England's bailout which have fueled rumors of a BOE rate cut, the forecast appears to becoming a reality.

"This is an important turning point for the pound," Jim McCormick, of Lehman Brothers told Bloomberg. "The expectations around the economy and monetary policy on the back of what has happened to Northern Rock have shifted pretty significantly."

The pound fell to a 17-month low against the euro at 70.053 pence.

In June France's BNP Paribas bank had said that Britain's currency would trade at $1.88 by year end, but is now predicting it will tumble 23% to $1.547 by next year.