Blast from the past as currency speculators circle weakened pound

Analysis: Experts warn that sharp losses for sterling could drive up cost of imports and invite attacks on the currency

The judgment of the markets was swift and brutal. Currency traders took one look at what the Bank of England was predicting for the UK economy and launched a sustained attack on the pound.

It was noon last Thursday when Threadneedle Street announced it was expecting that a 40-year high of more than 10% for the annual inflation rate would coincide with a shrinking economy.