Sterling Tumbles to Record Low against the Euro as UK Economic Woes Mount
THE TELEGRAPH: The pound fell to a new record low against the euro today after a stark warning that the pace of economic decline in Britain is accelerating as the country moves into a deep recession.

Sterling was the weakest it has been since the launch of the single currency in 1999, with one euro worth 87.79p compared with 71.91p just 12 months ago. The currency was under some pressure against the dollar too, hitting $1.4736 at its lowest point this morning.

For the first time in years, some currency analysts are beginning to speculate that the pound may be headed for parity - where one pound will buy you just one euro or one dollar. Others dismiss the view, expecting the euro to weaken next year as the downturn in Europe's economy worsens.

The pound is being hammered as investors quit the currency over fears that the UK will be one of the hardest hit by the global recession and - with Government debt mounting - is poorly equipped to cope. That message was reinforced this morning by the well-regarded National Institute of Economic and Social Research, which warned the UK is toppling into a deep recession in the fourth quarter and is likely to shrink by more than 1pc. >>> By Angela Monaghan | December 10, 2008

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Sterling’s Decline Against Dollar Hits Run Not Suffered Since 1975
TIMESONLINE: Sterling fell against the dollar for the eleventh day in a row yesterday, its longest consecutive decline since 1975, as concerns mounted over Britain’s faltering economy.

The pound hit a more than two-year low of $1.8514 – a level not seen since July 2006 – further extending a seismic shift in currency markets in recent days as interest rate expectations for big economies change.

This latest fall came only days after the Bank of England struck a doveish note in its quarterly Inflation Report, leading analysts to believe that the door may be open for rate cuts once spiralling inflation starts to fall.

Investors are fleeing to the dollar after reassessing the merits of the US economy against those of the UK and the eurozone.

They are betting increasingly that the US Federal Reserve’s next move will be to raise interest rates, while gloomy data from the UK and the eurozone this week suggested that rate cuts could be on the cards.

Analysts say that sterling’s fall is not over yet. Bilal Hafeez, a Deutsche Bank foreign exchange strategist, said: “We could level off at this rate for a while but I expect the pound will fall further.” Sterling’s Decline Against Dollar Hits Run Not Suffered Since 1975 >>> By Gráinne Gilmore, Economics Correspondent | August 16, 2008

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