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Sterling falls to new lows

Sterling today reached 98p to the euro in a move which many never believed could ever happen. Not only has the currency flirted with parity against the euro but the fall continues at an alarming pace. This is putting yet more pressure on the UK authorities to join the euro in the short to medium term and ensure that the UK economy is protected as much as possible for the future. Whether converting to the euro at such a low-level makes sense is debatable but currently there appears little reason to recommend or purchase sterling against any of the major currencies.

The further the pound slumps against the euro the more expensive imports become but the more competitive the UK economy is in the exporting arena. While traditionally you would expect this to lead to increased levels of activity in the manufacturing industry in particular this has not happened as yet and is unlikely to impact in the short term. As UK interest rates head down towards 0% there is a real concern that sterling could fall further against the likes of the euro and the dollar.

We have recently seen a change in the holiday market with many UK travellers looking more further afield than the Eurozone in their quest for better exchange rates.

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