Pound Falls to Record Versus Euro


The pound fell to a record low against the euro after reports showed CPI rose at a slower pace than forecast last month and the property-market slump deteriorated to the worst since records began.

The U.K. currency also fell to a six-week low versus the dollar as the data strengthened the case for the Bank of England to cut borrowing costs. Yields on sterling futures contracts dropped to the lowest levels since April 10, when policy makers reduced Britain's main lending rate for a third time since December to shore up the economy.

The pound fell as much as 0.8 percent to 80.64 pence per euro, the lowest level since the common currency's inception in 1999, and was at 80.47 pence by 1:46 p.m. in London. It will decline to 82 pence in three months, Robson forecast.

The pound also dropped to $1.9643, from $1.9784, and weakened versus all but one of the 16 most-traded currencies tracked by Bloomberg.

The number of residential property agents and surveyors saying U.K. prices fell exceeded those reporting gains by 78.5 percentage points, compared with 65.7 in February, according to the Royal Institution of Chartered Surveyors. It was the worst result since at least 1978.

Britain's currency is set for a long-term decline against the euro and the yen as the nation's economic outlook deteriorates, said Neil Jones, head of European hedge-fund sales at Mizuho Capital Markets in London.


TradingEconomics.com, Bloomberg
4/15/2008 6:44:56 AM