Pound falls to six month low against euro

Sterling fell to its lowest level against the euro in more than six months yesterday as British government plans to raise billions of pounds through asset sales reminded investors of how bleak the outlook is for the UK&rsquo;s public finances.<br /><br />Sterling yesterday dropped to a low of 1.069 against the euro, a level not seen since the end of March. The British pound also fell to a four-month low against the dollar too: it was last trading at $1.579, having earlier traded as low as $1.5728, a level not seen since 21 May. Sterling also fell against other currencies.<br /><br />Prime Minister Gordon Brown outlined plans to sell &pound;3bn of assets as part of a broader programme to raise &pound;16bn and help reduce the ballooning budget deficit.<br /><br />Also yesterday, a report from consultancy Centre for Economics and Business Research said interest rates could stay at the record low of 0.5 per cent until 2011 and reach only 2 per cent by 2014, highlighting the pound&rsquo;s relatively dim appeal from a yield perspective.<br /><br />It added the UK currency could weaken to $1.40 and could even fall below the &euro;1.00 mark. &ldquo;Those working in the forex markets are not fools and will want to pump down the value of sterling if they see a prolonged period of low interest rates,&rdquo; said CEBR chief executive Douglas McWilliams, who believes there is at least a one in three chance that sterling will fall below parity with the euro in the near future.