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Sterling hits 23-year low against the dollar
Sterling has fallen again today (23 January), at one point reaching just $1.35, its lowest rate since 1985, amid worries over the UK banking sector.
Speculation about the possible nationalisation of major UK banks, the Bank of England’s liquidity push and potential further rate cuts led the sterling to plummet. However, it had regained some ground by 4.50pm to be $1.3605.
Stephen Heath, chief executive of FairFX.com, said: "When measured against a basket of currencies Sterling has collapsed by approximately a quarter, more than any previous devaluation in the past century.
"The escalation in the banking crisis and news that we have officially entered recession has led to investors dumping sterling in favour of more secure assets and the pound falling to its lowest rate against the dollar in almost a quarter of a century."
The sterling has suffered just as badly against the Japanese yen, dropping to Y121.45 by 4.50pm. Meanwhile, it also fell against the euro to €1.0627.
James Hickman, managing director of Caxton FX added: "Sentiment is driving the pound to new lows every day and there doesn’t appear to be any floor... Parity against the euro is now a genuine possibility and is a there is a chance we could see £1 to 100 yen."
