Page last updated at 07:47 GMT, Thursday, 22 January 2009

Pound still close to 23-year low

Dollars

Sterling has fallen back close to a 23-year low against the dollar, erasing earlier gains.

The pound stood at $1.3915 against the dollar and was worth 1.0688 euros.

On Wednesday, the pound fell to $1.3620, its weakest level since late 1985, on worries over the strength of the UK economy and the banking sector.

But sterling later rebounded after a source told the Reuters news agency the G7 would discuss the pound weakness at its meeting in February.

Last summer the pound was trading at more than $2.

Pounding

The pound's slide this week followed Royal Bank of Scotland signalling it would make a record loss in 2008 and further government measures to encourage UK banks to lend.

"Fresh concerns about the key banking sector have fed through into broader concerns about the outlook for the economy," said Simon Derrick, a currency strategist at Bank of New York Mellon.

Economic data released on Wednesday exacerbated these fears.

UK mortgage lending fell by 30% in 2008 to the lowest level since 2002, while unemployment rose by 131,000 to 1.92 million between September and November.

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