Page last updated at 22:50 GMT, Thursday, 24 September 2009 23:50 UK

Pound extends losses against euro

A one euro coin is pictured with a pound coin

The pound has fallen sharply against the euro and the dollar after the head of the Bank of England said a weak currency was "helpful" to the economy.

The pound fell to 1.0947 euros, its lowest since early April, and dropped by almost two cents to $1.6066.

Bank governor Mervyn King said in a newspaper interview that a fall in the exchange rate would help to balance the UK economy by giving exports a lift.

Analysts said the pound was likely to fall further against the euro.

The pound has weakened in recent days on fears about the high level of UK debt.

However, the pound is still well above the levels hit early in the year when it traded below $1.50 against the dollar.

'Downward spiral'

Mark O'Sullivan, director of dealing at Currencies Direct said Mr King's comments indicated that the central bank was in favour of a weak pound.

"If we continue to see the pound being talked down from the top then the downward spiral towards parity with the euro will continue apace," he said.

Mr King also told the Journal newspaper in Newcastle that UK economic growth was beginning to pick up, but said people should not get carried away.

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