As we reported on Absolute Gadget, Those rumours of a price cut for Microsoft's Xbox 360 have turned out to be true. The console will drop its price on Friday. 

This means that the retail price for its entry-level Arcade console will drop to £159.99 - a cut of £50 and will make it cheaper than the Wii. IT doesn't stop there, the Xbox 360 Pro, which sports a 20GB hard drive and a wireless controller, will have seel for £199.99 - (it used to be £249.99). The 120GB Xbox 360 Elite, will retail for £259.99 - a drop of £40.

According to the The German edition of the Financial Times, the cut has been taking place across Europe.

"History shows that £159.99 is the price point where a console's audience begins to expand," said Microsoft's European Interactive VP Chris Lewis. "And with these new prices in place we're ready to bring more consumers into the Xbox 360 world,"

According to Strategy Analytics principal analyst David Mercer the cut puts Sony "under renewed pressure" with even the highest-end model, the Elite, now £40 less expensive than the PS3.

"Sony will be nervous that the PS3's recent sales surge may fizzle out now that the premium Xbox 360 undercuts the PS3 by £40, and the cheapest Xbox model is almost half the price of a PS3," he said. "Sony will be scrutinising the daily sales reports, but will probably try to hold out until later in the year before making its next price move."

Of course, if it gets any cheaper it might be worth putting a Blu-ray player in it?