Pound finds a new all-time low against Euro
14 November 2008
The pound sterling (£) has found a new low against the Euro (€) for the second day running, pulled down by a weak British economy and anticipated cuts in benchmark interest rates.
The Bank of England also published its latest quarterly inflation report and is widely expected to announce further large cuts in UK base rates. The Bank's Monetary Policy Committee astonished financial markets around a week ago by slashing base rates by one-and-a-half points to three per cent, the lowest since 1955.
The Sterling sank to a 12-year low against a basket of currencies when finding its new record low against the Euro. The pound closed at 84.87p against the Euro, the lowest since the single currency was introduced in 1999. It also fell below the $1.50 mark against the US dollar, closing down by over two cents at a six-year low of $1.4810.
The weakness in the currency would be bad news for 1.08 million Britons living abroad and claiming a UK state pension. It will push up cost of living for those living in the Euro zone, as the pound would buy lesser than before.
The media quoted analysts as expecting the pound to fall further against both the Euro and the US dollar, with some predicting that the pound would reach 90p against the Euro within around three months.
Analysts were also reported to have said that the weakness would persist for another two or three quarters.