Pound could soon be worth just one euro

Sterling was today on course for its worst week ever against the European single currency, raising the prospect of a one pound euro.

The pound traded at 87.2p per euro, meaning it has lost five per cent since opening the week at 82.7p - the largest fall since the single currency was launched in 1999. It is down 20 per cent on a year ago.

The pound also fell 0.10 cents against the US dollar to $1.468, leaving sterling down 30 per cent from its peak of more than $2 in the summer.

It means skiers face record costs this winter on ski passes, hotels and meals in Europe and North America.

Analysts warned the rapid deterioration of the UK economy and further cuts in interest rates mean a one pound euro is now a possibility.

One broker said the pound is heading for "near parity" with the euro in coming months as the Bank of England slashes rates and the recession deepens.

Others cautioned that with the European Central Bank also cutting rates in the eurozone, it may not go that far. Philip Shaw of Investec said: "Who can rule anything out in these markets, but you would need truly abysmal news for sterling to fall another 15 per cent or so against a currency whose economy is struggling as well. Possible, but unlikely."

A spokesperson for the Ski Club of Great Britain said: "These currency fluctuations will really affect how much it costs to eat out and enjoy yourself in resort so people will probably spend less while they're on skiing holidays. The cost of packages has been affected but many people booked months ago when the pound was stronger.

"If you want to do a do-it-yourself holiday and buy different parts of your holiday, like ski hire and accommodation, separately you'll be more affected by the exchange rates."