British pound continues to fall

The British pound has continued to falter against the dollar as it reached $1.4794 at one point yesterday, which is its weakest level since 2002. This is due to increased fear of a recession as the news follows on from the fact that the Bank of England announced it would cut interest rates again if it deemed necessary.

Since July this year the pound has lost more than a quarter of its value when it was worth more than $2, and against the euro it is similarly at a near record low currently trading at 83.81 pence per euro.

The pound has become less attractive to investors following the action by the Bank of England to cut interest rates to just 3 percent, which is the lowest level since 1955.

Geoffrey Yu, a currency strategist in London, has said that the falling sterling may continue for at least another 9 months and the pound will continue to fall as interest rates are needed to be cut.

According to Deutsche Bank AG, the British currency’s trade-weighted index is at its weakest since 2000, having dropped 3.3 percent to 78.01.

The weakness of the pound is a mirror image of the British economy and it is predicted that the economy will remain a burden to the value of the pound and it may even reach the point of 85 pence per euro.

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