Pound continues to decline against dollar

| August 15, 2008 | 0 Comments

Fears over the UK economy continue to increase as the pound tumbled against the US dollar again today.

In morning trading today, sterling was down 0.9% to $1.8514, this marked the 11th consecutive day of falls - the longest run of losses in 37 years.

The pound experienced a sharp fall on Wednesday after Governor of the Bank of England, Mervyn King, delivered the August Inflation Report.

Mr King said the next year is to be a difficult one, with inflation high and output broadly flat.

Earlier this week, it was revealed that the UK’s annual rate of inflation has surged to a record high of 4.4% in July and is at its highest level since current records began in 1997.

Meanwhile, the dollar continues to gain after it has reached a six-month high against the euro.

According to Tim Clayton, chief strategist at Investica, the US was the first economy to experience problems in the current global economic crisis. However, it now seems that people are realising that the UK has the same difficulties as the US, if not more so.

The fall in the pound will affect holidaymakers who have benefited from a strong pound when visiting countries which use the dollar. Just a few weeks ago, one pound would buy two dollars.

However, the fall in sterling could benefit exporters whose goods will be cheaper abroad.

The euro also gained against the pound, up 0.2% at 79.35p.

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