Pound falls to record low

A record low for the pound against the euro was recorded on Monday, following comments by the Finance Minister – Alistair Darling – stating that the economy of the UK if facing the biggest recession for 60 years.

With the pound already under pressure from recent speculation on the worsening state of the UK economy, Darling’s comments have fuelled the fire and led to a record fall in the value of the pound.
    
Worst since 1992

In August the pound fell by a record amount, the worst since 1992,m against the dollar and the economy is seen by many as being at a standstill at the moment with nowhere to go. The housing market in the UK is currently in free fall, with construction firms reducing staff in great numbers month by month in order to cut rising costs and attack falling sales.

Analysts in Europe have been watching the pound closely, and point to the state of the currency as a definite indicator of the state of the UK economy. Many state that recession is inevitable as the economy falls further.
    

Bank of England to cut rates

The Bank of England is due to hold a scheduled Monetary Policy meeting in the week to come, and renewed speculation is rife that interest rates would begin a round of cuts in the coming quarter, despite the continued rise in inflation in the country at the moment.

Mr Darling’s comments have met with disapproval from UK Prime Minister, Gordon Brown, and the Labour Party appear to be increasingly at odds internally as the country struggles under Mr Browns leadership. Gordon Brown was Chancellor of the Exchequer under the previous Labour Prime Minister, Tony Blair.

With the economy in the state it is, further problems in the political arena are only serving to put further pressure on the pound as it struggles to compete in a competitive market.
    

Prime Minister Gordon Brown under fire

Gordon Brown’s Premiership has not been well received, either by the public or the press, in the UK, and stories that he is planning a revamp and relaunch of his leadership in order to shore up the image of himself and his party are having little effect on the economic state of affairs.

Mortgage approvals fell in July to a record low of around 33,000, giving further indication that the housing market slump is to get worse before it gets better,

The pound initially dropped to 0.8139 against the euro – an all time low – but later rallied a little to 0.8115. A similar drop – to a two-year low – was recorded against the dollar, as well as losses against the yen.