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| Struggling sterling hits new lows | Struggling sterling hits new lows |
| (40 minutes later) | |
| The pound has fallen to two-and-half-year low against the US dollar and record low against the euro amid fears about the health of the UK economy. | The pound has fallen to two-and-half-year low against the US dollar and record low against the euro amid fears about the health of the UK economy. |
| Sterling fell as low as $1.7850, and was trading at 81.62 pence per euro. | Sterling fell as low as $1.7850, and was trading at 81.62 pence per euro. |
| Measured against a basket of currencies used by major trading partners, the pound is now at a 12-year low. | Measured against a basket of currencies used by major trading partners, the pound is now at a 12-year low. |
| Sterling has fallen sharply over the past month - in mid-July one pound bought two dollars - as fears increased the UK was heading for a recession. | Sterling has fallen sharply over the past month - in mid-July one pound bought two dollars - as fears increased the UK was heading for a recession. |
| At the same time, the dollar has been helped by a fall in the price oil. | At the same time, the dollar has been helped by a fall in the price oil. |
| Difficult outlook | Difficult outlook |
| The US currency has been gaining ground in recent weeks and on Tuesday the euro fell to a seven-month low versus the dollar, dipping below $1.45. | The US currency has been gaining ground in recent weeks and on Tuesday the euro fell to a seven-month low versus the dollar, dipping below $1.45. |
| Falling oil prices, which hit a five-month low on Tuesday, have been a factor behind the dollar's rally. | Falling oil prices, which hit a five-month low on Tuesday, have been a factor behind the dollar's rally. |
| Investors had bought commodities to protect against the dollar's weakness earlier this year but are now unwinding those positions - to the US currency's benefit. | Investors had bought commodities to protect against the dollar's weakness earlier this year but are now unwinding those positions - to the US currency's benefit. |
| Analysts also said the dollar was strengthening because the US economic outlook appeared better than the deteriorating picture in the UK and the eurozone economies. | Analysts also said the dollar was strengthening because the US economic outlook appeared better than the deteriorating picture in the UK and the eurozone economies. |
| "It is difficult to see an improvement in sentiment in the UK in the very near term," said analysts at Barclays Capital. | "It is difficult to see an improvement in sentiment in the UK in the very near term," said analysts at Barclays Capital. |
| Gloomy comments over the weekend from UK Chancellor Alistair Darling, who warned that Britain was facing its toughest economic challenge for 60 years, triggered sterling's plunge on Monday. | Gloomy comments over the weekend from UK Chancellor Alistair Darling, who warned that Britain was facing its toughest economic challenge for 60 years, triggered sterling's plunge on Monday. |
| Weak mortgage approval data added to the dark mood. | Weak mortgage approval data added to the dark mood. |
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