Sterling falls against dollar over euro zone debt fears

The pound dived to a low not seen since May 2009 today over debt fears in the euro zone.

It was the fourth consecutive day of losses and the pound fell to $1.5535 in early London trade - an 8½ month low.

The losses came as investors worry about how euro zone economies (including Greece and Portugal) will tackle their debts.

Geraldine Concagh, economist at AIB Group Treasury in Dublin, told Reuters: “We could see $1.55 if the selling continues. That’s going to depend on the general attitude on risk. The sovereign issue is going to be the key thing this week.”

Last week, the debt fears in Europe resulted in heavy falls across stock markets. There have been growing fears for Greece - which is the euro zone’s weakest economy.

Greece has the highest debt of the 16-member bloc. Currently, its public debt stands at €300 billion (£268 billion).

Furthermore, there are fears for Portugal after the country experienced a slump in demand for Government bonds.

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