Sterling hits 17-month low vs buoyant dollar
Fri Aug 8, 2008 9:16am BST


* Sterling falls to $1.9257, its lowest since March 2007, on worries about European economies

* Euro weak, down 0.4 percent vs sterling

LONDON, Aug 8 (Reuters) - Sterling hit a 17-month low against a broadly buoyant dollar on Friday, as investors took a warning on slowing euro zone growth as a signal to pick up the greenback against a host of currencies.

Sterling was en route to its worst weekly performance in percentage terms in roughly three years, as investors dumped the pound against the dollar as the UK economy struggles.

On Thursday, European Central Bank President Jean-Claude Trichet followed up a decision to hold interest rates at 4.25 percent by saying that growth in mid-2008 would be substantially weaker than at the start of the year.

Broad weakness in the UK economy prompted the Bank of England to hold interest rates at 5 percent on Thursday, a decision widely expected given recent data showing falling house prices, rising unemployment and limited growth.

"The selloff on the pound has been sharp," said Philip Shaw, chief economist at Investec. "There is barely a sector in the UK economy which is performing reasonably well right now, there is a degree of political uncertainty, public finances are poor."

By 0808 GMT, the pound was down 0.7 percent at $1.9300 <GBP=>, having tumbled as far as $1.9257 to hit its lowest since March last year.

The UK currency has tumbled more than 2 percent so far this week, having crashed from a 3 1/2-month high of $2.0153 hit only three weeks ago.

http://uk.reuters.com/article/ukPoundRpt/i...859575320080808

Advertise With MMG. Click Here Now To Find Out How.