Pound fall against euro continues

The pound has touched another all-time low against the euro, driven by the Bank of England cutting UK interest rates as had been widely expected.

One pound was worth as little as 1.2457 euros in Thursday trading though sterling later strengthened slightly, to be worth 1.25195.

The Bank trimming rates to 5% had already been priced in, analysts said.

Interest rate cuts generally encourage investors to switch to other currencies which have a higher rate of return.

Q&A: The strong euro

While the pound went below 1.2500 euros, the European single currency touched as high as 80.3 pence.

The news is good for UK exporters whose goods become slightly cheaper.

But observers say that British holidaymakers are likely to notice the pound's weakness when they go on holidays to eurozone nations such as Spain, France and Portugal.

The Bank of England cut rates to ease growing economic and consumer jitters caused by the impact of the global credit squeeze.

Against the dollar, the euro was up slightly to $1.5744, while one pound was worth $1.9738