Pound hits new 15-year low

The pound has slid to a new 15-year low against the dollar, amid predictions that the campaign to persuade the UK to join the euro could start shortly after Thursday's general election.

At 1200 GMT, the pound had slumped as low as $1.3804, extending the15-year low reached on Wednesday, and also slipped to a three-week low at 1.6295 euros. In later trading, though, the pound gained nearly a cent on the US currency.

During the past year, UK exporters suffered because of the strong pound, and the UK is unlikely to join the eurozone at the current exchange rate.

Currency traders say the pound's weakness comes in anticipation that the euro exchange rate will be adjusted accordingly.

Analysts expect the sterling sell-off, which began on Wednesday, to come back and hit the currency again and again until the issue of UK euro membership is resolved.

Prime Minister Tony Blair has denied he is planning a euro campaign as soon as the ballots are counted.

Blair's promise

But he has previously promised to make a decision on whether to hold a referendum on joining the euro within two years of the election.

The value of the pound at which it would be adopted into the single European currency is expected to be at an exchange rate well below the current level.

The euro was steady against the dollar after the European Central Bank on Thursday left rates unchanged at 4.5%, as had been widely anticipated.

Holiday blues

Sterling's fall comes at a bad time for UK holidaymakers who will get less for their money when they go abroad.

This is particularly true for those going to the United States, but even people going to European countries will notice the difference as the UK currency has slipped against the euro as well.

Companies importing goods and services from the US or other countries will also lose out because their costs will rise.

But for UK exporters, a weaker currency is good news because their products will be cheaper and therefore easier to sell.

A weaker pound also makes it cheaper for people from other countries to come on holiday to the UK.

This will be welcomed by the tourist industry which has suffered a sharp fall in trade as a consequence of the foot-and-mouth epidemic.