In These New Times

Sterling falls against the euro as parity beckons

By Deborah Hyde

22 September 2009

Citywire
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Sterling continues to fall against the euro as increasing numbers of market watchers believe a move to parity is on the cards.
At 10.44, sterling was trading at €1.1031 against the euro – within spitting distance of all-time lows of €1.0193 last December.
Ian Williams, strategist at Altium Securities, says yesterday’s quarterly report from the Bank of England has put extra pressure on sterling.
‘The bank’s bulletin highlighted the reality that the UK economy needs to rebalance towards a greater contribution from exports and investment. It wasn’t a forecast, but investors needed little further excuse to dump more pounds,’ he said.
Meanwhile, strategists at RBS are amongst those predicting sterling has further to fall.
‘Sterling continued its weakness after a Bank of England report warned that the financial crisis might have prompted a downward reassessment of sterling’s long term value. Our FX strategists believe that EURGBP will hit parity,’ said Jon Adkins.