Sterling falls further against dollar

| August 19, 2008 | 0 Comments

Sterling has fallen more than 15 cents from a high of over $2 against the dollar since last month, hit by a combination of slowing growth and runaway inflation.

The pound is approaching a two-year low and a leading City analyst has warned it has further to fall.

The pound was down 1.3cents today to $1.8555 and according to Steve Barrow of Standard Bank, it could possibly fall to the $1.80 mark.

The news increases fears about the state of the British economy.

Last week saw the pound fall sharply 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.

Last week, it was also 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.

Tim Besley, Bank of England Monetary Policy Committee member, said the bank faces a difficult job in trying to help the economy while also trying to curb runaway inflation.

The Bank has left interest rates unchanged in a bid to manage runaway inflation and many economists believing cuts in interest rates are unlikely in the short-term.

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