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Pound falls after Fitch warns of UK's "formidable" problems

STERLING has fallen against the euro after Fitch ratings agency described the fiscal challenge facing the UK as "formidable".

Fitch said "the scale of the UK's fiscal challenge is formidable and warrants a strong medium term consolidation strategy – including a faster pace of deficit reduction than set out in the April 2010 Budget".

Sterling fell more than half a cent against the dollar, diving to a low of $1.4382 while the euro rose to 82.91 pence.

"The Fitch announcement certainly accentuated the move lower in sterling, taking it down through $1.4400 and triggering stops of some nervy longs," said Richard Wiltshire, chief FX broker at ETX Capital.