The pound slumped to a new all-time low against the euro on Monday, edging towards parity, as the escalating violence in Gaza dominated markets, dealers said.
At 16:54 GMT, sterling was worth 1.0251 euros, down from 1.0407 at Friday’s close, while it stood at 1.4586 dollars, down from 1.4657 over the same period.
“The developments in the Middle East are likely to keep fuelling the euro at least for a day or two,” Yuji Saito, head of foreign exchange at French financial giant Societe Generale, told Dow Jones Newswires.
“The euro will probably touch parity with sterling in two weeks,” Saito added.
Sterling has hit a series of record lows versus the euro over the past month on expectations that the Bank of England will continue to slash interest rates amid gloomy economic data from Britain.
Meanwhile, London’s FTSE 100 index of leading shares ended up 2.4 percent at 4319.35, albeit with light holiday season volumes.
Royal Bank of Scotland (RBS), topped the blue chip risers, up 6 pence — or 14.1 percent — at 48.7, amid speculation that the bank is still in discussions with suitors over the disposal of its insurance business.
International banking group Standard Chartered was the second best performer, gaining 54 pence — or 7.15 percent — at 809.
Property group Liberty International was the day’s biggest faller, down 30 pence — or 6.05 percent — at 469.75, followed by fellow property developer Hammerson, which slipped 30.5 pence — or 5.47 percent — at 527.5.
http://news.yahoo.com/s/afp/20081229/wl_uk_afp/forexbritain;_ylt=AgHt53B8IEqdgjkwZ6EEKPB0bBAF




