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Pound crashes more than 2.5 cents against dollar
24.09.09
Sterling plunged more than two-and-a-half cents against the dollar tonight as nervous investors were again spooked by the Bank of England.
In one of the biggest daily falls in recent times, the pound fell 2.55 cents against the greenback to $1.6083 and 1.50 cents against the European single currency to €1.0942 — its lowest for more than five months.
Stuart Bennett, currency strategist at Calyon, said: “When the market's down on a currency, it will jump on anything that justifies selling it. Sterling is certainly the whipping boy at the moment.”
It came after Bank Governor Mervyn King said sterling's fall “will be helpful” to rebalance the UK economy to one more focused on exports. Peter Dixon of Commerzbank said: “The general feeling is sell the pound'. That is what the markets want to do.”
Sterling has fluctuated violently in recent weeks and a number of attempted rallies have been reversed by bearish comments from the Bank.
Currency traders are now hanging on every word from Threadneedle Street. Dixon said: “There is a sense in the market that the Bank is trying to talk the pound down and the market is obliging.
“Whenever the Bank says something, the market jumps. It is overdone. The market is far too sensitive to news at the moment but that is the reality we have to live with.”
Sterling was trading just shy of $1.70 in August before the Bank extended quantitative easing by £50 billion to £175 billion.
Duncan Higgins, analyst at Caxton FX, said: “King's comments underline the need to focus more on exports. To achieve this, a weak pound is necessary to assure the competitiveness of those exports in the global markets, so King has no desire to see the pound gain value.
“The pound will continue to decline steadily over the short term, heading towards parity against the euro by the end of October.”
Gold, oil and other commodities trading in US dollars fell as the greenback rallied. Gold was down $15.20 to $999.20 an ounce and crude was down $2.84 at $66.14 in New York.
Reader views (14)
Well if the country is taxed to the tilt and has no reserves left what do you think. Thanks to the appropriately called Crash Gordon...
- Steveo, London NW1
It's but a race to the bottom chaps. But, not to fear, super Gordon will save you all!
- Threaded, Roskilde, Denmark
Peter
The trend is your friend but do not be a chorus girl in the forecasting game. The strength of the Euro is an utter fiction, witness the weak undrbelly of the Garlic Belt and the Celtic West...
- James Macleod Ritchie, Oyster Bay Cove
What else can we expect with an idiot as Prime Minister.
- Frank, Bournemouth, England
And this will push inflation up because imports will become more expensive.
I suppose the banks might want this--but people DON'T.
- William Grierson, Kimpton-UK
The incompetent Brown and Darling have tried to make the voters think that everything is okay by artificially stimulating the economy and employing quantitive easing. But these adrenalin shots are now wearing off and the patient will certaibly collapse again - expect currency crises, inflation, soaring unemployment and civil unrest in the next few years. The old political establishment is discredited; we need a new party of the right with a charismatic leader of integrity to save our country.
- John, London
Britain is slowly but surely falling into the gutter of moral decline"
Well do something about it Mike, instead of carping on about it being Mr Brown's fault all the time.
- Keith Price, Luton England
Mr King must Be the only person to want a weak pound !!!
I am sure that he does not speak for the majority of us !
Perhaps he should consider his position !!
- Bernard Parke, GUILDFORD
too many drinks at lunchtime mike?
- Scotty, london
I think King should resign, his mandate is to support sterling now sell it down the drain.
Did he advise Brown to sell the gold??
- Tojo, Hythe
Keith Price is strangely quiet at the moment...
- Joanna Carling, london
This is an indirecr consequence of supporting the housing market
The party will end soon
- Philip, Lincoln
Britain is slowly but surely falling into the gutter of moral decline because of social engineerig that as backfired on those traiters that instigated it against the wishs of the people.
- Mike,, London
King should know better than to openly advocate GBP weakness. I trust the UK contingent is getting an earful from the Eurozone attendees at the G20.
- Paul, London
