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Recession fears push pound down | Recession fears push pound down |
(about 2 hours later) | |
The pound has hit a record low against the euro and a two-year low against the dollar amid fresh fears about the UK sliding into recession. | The pound has hit a record low against the euro and a two-year low against the dollar amid fresh fears about the UK sliding into recession. |
Gloomy housing and manufacturing data and comments from the Chancellor about the UK's economic woes are to blame for the pound's decline, traders said. | Gloomy housing and manufacturing data and comments from the Chancellor about the UK's economic woes are to blame for the pound's decline, traders said. |
Sterling hit 81.21 pence against the euro, before trading at 81.14 pence. | Sterling hit 81.21 pence against the euro, before trading at 81.14 pence. |
In later trade sterling slipped below $1.80 - the lowest since April 2006 - as lower oil prices helped the dollar. | In later trade sterling slipped below $1.80 - the lowest since April 2006 - as lower oil prices helped the dollar. |
By the end of European trade, one pound was worth $1.8011. | By the end of European trade, one pound was worth $1.8011. |
Sterling has fallen sharply over the past month. In mid-July, one pound bought two dollars. | Sterling has fallen sharply over the past month. In mid-July, one pound bought two dollars. |
The catalyst for sterling's latest fall was downbeat data from the property and manufacturing sectors. | The catalyst for sterling's latest fall was downbeat data from the property and manufacturing sectors. |
All indicators seem to suggest that the economy will unavoidably slide into recession Lutz Karpowitz, analyst, Commerzbank | All indicators seem to suggest that the economy will unavoidably slide into recession Lutz Karpowitz, analyst, Commerzbank |
Recession fears | Recession fears |
UK mortgage approvals fell 71% in July, the the lowest level since records began 15 years ago, according to the Bank of England. | UK mortgage approvals fell 71% in July, the the lowest level since records began 15 years ago, according to the Bank of England. |
Meanwhile, property consultants Hometrack said house prices fell for an 11th straight month in August. | Meanwhile, property consultants Hometrack said house prices fell for an 11th straight month in August. |
Elsewhere in the economy, the manufacturing sector shrank for the fourth month in a row in August as demand fell at home and abroad. | Elsewhere in the economy, the manufacturing sector shrank for the fourth month in a row in August as demand fell at home and abroad. |
"The current weakness of sterling accurately reflects the present situation of the British economy," said Lutz Karpowitz, an analyst at Commerzbank. | "The current weakness of sterling accurately reflects the present situation of the British economy," said Lutz Karpowitz, an analyst at Commerzbank. |
"All indicators seem to suggest that the economy will unavoidably slide into recession." | "All indicators seem to suggest that the economy will unavoidably slide into recession." |
Gloomy Chancellor | Gloomy Chancellor |
The data adds to the wave of gloomy news about Britain's economic health, summed up by the Chancellor at the weekend. | The data adds to the wave of gloomy news about Britain's economic health, summed up by the Chancellor at the weekend. |
In an interview with the Guardian newspaper on Saturday, Alistair Darling warned that the economic downturn was likely to be deeper and could last longer than first feared. | In an interview with the Guardian newspaper on Saturday, Alistair Darling warned that the economic downturn was likely to be deeper and could last longer than first feared. |
BBC economic editor Hugh Pym said the global mood had turned against the pound in recent weeks, because of the perceived problems with the UK economy. | |
The chancellor's recent comments had served as a reminder of those issues - if anyone needed reminding, our correspondent added. | |
The former Bank of England policymaker Professor Charles Goodhart warned that the UK's economic recovery may not begin until 2010. | The former Bank of England policymaker Professor Charles Goodhart warned that the UK's economic recovery may not begin until 2010. |
Analysts said that sterling's fall was fuelled by pessimistic prospects at home and a downturn in the eurozone economy that could also hurt UK growth. | Analysts said that sterling's fall was fuelled by pessimistic prospects at home and a downturn in the eurozone economy that could also hurt UK growth. |
"It's now just a question of which is the straw that breaks sterling's back," said Martin McMahon, currency strategist at Credit Suisse. | "It's now just a question of which is the straw that breaks sterling's back," said Martin McMahon, currency strategist at Credit Suisse. |
Another measure of sterling's performance - the trade-weighted sterling average - also fell to the weakest level since October 1996. | Another measure of sterling's performance - the trade-weighted sterling average - also fell to the weakest level since October 1996. |
The trade-weighted sterling average tracks the currency against the UK's main trading partners. | The trade-weighted sterling average tracks the currency against the UK's main trading partners. |