Pound hits new low against euro

The British pound has taken another hit, falling to an all-time low against the euro and barely reaching US$1.8 against the dollar.

LONDON // The pound took another hit yesterday, falling to an all-time low against the euro and barely reaching US$1.80 (Dh6.61) against the dollar. The pound's weak performance came after the UK's Chancellor of the Exchequer, Alistair Darling, gave a bleak assessment of the economy ahead of a Bank of England interest rate decision due this week. The news will be well received by many British ex-pats whose would benefit from a more favorable exchange rate on their return. Yesterday, the European single currency stood at 81.39 pence (Dh5.25) at one point, the best level versus sterling since the euro's creation in 1999. Against the dollar, the pound briefly fell to 1.80 dollars, its lowest level since April 2006. "It seems likely that investors will continue to shun the pound for some time to come," Simon Derrick, a currencies strategist at the Bank of New York Mellon said. "We are reminded once again that when the pound falls, it falls hard," he said. Meanwhile, new figures showed that UK mortgage approvals slumped to a record low in July. Mr Darling warned over the weekend that Britain was facing "arguably the worst" economic downturn in 60 years and said it would be "more profound and long-lasting" than people had expected. The chancellor also admitted in an interview with Saturday's Guardian newspaper that he had no idea how serious the credit crunch would become. Mr Darling's comments came after recent official data revealed that the British economy had recorded zero growth in the second quarter of the year. On Thursday the Bank of England is expected to keep interest rates at 5.0 per cent as Britain battles against both stagnant economic growth and soaring inflation. * AFP