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Pound hits low at euro 1.118
Friday December 12, 6:41 am ET
LONDON (AP) -- The British pound fell to a record low against the euro on Friday for the fifth consecutive day, hitting euro 1.118 as some analysts predicted the British currency is eventually headed for parity, or one pound to the euro.
It was the pound's weakest rate since the euro was launched in 1999, and the rate for British travelers closed the gap with parity still further, with some exchange bureaus offering euro 1.07 to the pound.
"It's looking like it's going to hit parity in the first quarter of next year," said Mark Deans, a dealer at Moneycorp in London.
The pound has fallen by around 20 percent against the euro in the past year as the Bank of England has lowered interest rates from a peak of 5.75 percent to a more than 50-year low of 2 percent -- a move that can weaken demand for a country's currency by reducing the yield on interest-bearing investments.
Fears about the British economy, which shrank 0.5 percent in the third quarter and appears headed into a serious downturn -- are also weighing on the currency.
The lower pound raises costs for Britons when they travel to the 15 countries that use the euro, and raises the price of imported goods.
The weaker currency should be a boost for British exporters, but the economic woes of the country's largest export markets in the United States and Europe are curbing demand for products, negating some of those positive effects.
The pound was also lower against the U.S. dollar, at $1.4950, down from $1.4978.
