Fears of triple-dip recession denting sterling
Continuing concerns about the state of the UK economy is hitting the performance of sterling on the financial markets, experts have stated.
According to foreign exchange specialist HiFX, the pound endured "widespread losses" yesterday (January 14th).
For instance, it noted that the currency fell to its lowest level against the euro since April last year.
Andy Scott, premier account manager at HiFX, believes this is partly because of ongoing fears about Britain slipping into a triple-dip recession.
He noted that the possibility of the UK's sovereign credit rating being downgraded is also having an impact on the sterling, along with continuing questions about its future relationship with the EU.
"The pound is down 2.5 per cent so far this year against the euro and the US dollar, our two main trading partners, and down over three per cent against the Australian and New Zealand dollars," Mr Scott commented.
As a result, he is concerned about the outlook for the pound over the coming year.
Mr Scott said this is because the US economy has outperformed the UK's in recent months, thereby making the pound "less attractive".
Furthermore, he noted that there is the "potential for instability" due to the debate about Britain's future involvement with the EU.
Prime minister David Cameron has already expressed a desire for the UK to repatriate some powers from Europe and will deliver a keynote speech on the subject later this week.
Concerns over the content of Mr Cameron's speech have already been raised by deputy prime minister Nick Clegg, who said uncertainty over Britain's place in the EU could act as a deterrent to investors.
Speaking to BBC Radio 4's Today programme, Mr Clegg said the UK needs to be very careful about creating a "prolonged period of uncertainty" at a time when the economy is still "haltingly recovering" from its worst shock in many years.