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| Version 1 | Version 2 |
|---|---|
| Pound reaches 14-month euro low | Pound reaches 14-month euro low |
| (about 2 hours later) | |
| The pound has briefly fallen to a 14-month low against the euro on fresh doubts over the UK economy's resilience in the face of a global credit squeeze. | The pound has briefly fallen to a 14-month low against the euro on fresh doubts over the UK economy's resilience in the face of a global credit squeeze. |
| At one point, the pound was trading at 68.58p to the euro, after the Bank of England offered emergency help to UK mortgage lender Northern Rock. | At one point, the pound was trading at 68.58p to the euro, after the Bank of England offered emergency help to UK mortgage lender Northern Rock. |
| The move has led to fears that other banks could have to seek similar aid. | The move has led to fears that other banks could have to seek similar aid. |
| To ease panic in the financial system, the Bank of England could delay raising rates, further hitting the pound. | To ease panic in the financial system, the Bank of England could delay raising rates, further hitting the pound. |
| The pound rose slightly in later trading to 68.99 pence, while the euro hovered just below record highs against the dollar set on Thursday. | |
| The euro has gained momentum as currency investors bet that the European Central Bank will raise its key interest rate of 4% by December this year. | The euro has gained momentum as currency investors bet that the European Central Bank will raise its key interest rate of 4% by December this year. |
| The move is expected as the central bank has made it clear that keeping inflation under control is a priority as the bloc's economy continues to expand at a steady pace. | The move is expected as the central bank has made it clear that keeping inflation under control is a priority as the bloc's economy continues to expand at a steady pace. |
| Market suspicion | Market suspicion |
| In contrast, analysts have abandoned expectations of another interest rate rise in the UK, while the money markets continue to dry up and house prices look to have peaked. | In contrast, analysts have abandoned expectations of another interest rate rise in the UK, while the money markets continue to dry up and house prices look to have peaked. |
| A survey from the Royal Insititute of Chartered Surveyors earlier in the week showed house prices fell in August for the first time in two years. | A survey from the Royal Insititute of Chartered Surveyors earlier in the week showed house prices fell in August for the first time in two years. |
| Northern Rock was the biggest mortgage lender in the UK in the first half of the year. | |
| So its problems accessing funds in the normal way through borrowing from banks and other financial institutions has deepened fears that the British economy will suffer as a result of the credit clampdown. | |
| This has prompted many traders to predict that the Bank of England could even start cutting rates from their current level of 5.75% from next year to support growth and renew confidence in the financial system. | |
| A rate cut would see sterling fall further against major currencies, such as the euro and dollar as the currency would become less attractive for income seekers. | |
| "The longer credit market turmoil persists, the more the market will view currencies with housing market excesses with suspicion," said ABN Amro analysts. | "The longer credit market turmoil persists, the more the market will view currencies with housing market excesses with suspicion," said ABN Amro analysts. |
| "The UK and the pound may be seen as the next cab off the rank." | "The UK and the pound may be seen as the next cab off the rank." |