Sterling takes pounding from euro

THE pound fell to a record low against the euro as concern over the UK economy continued to darken City skies.

In volatile trading, sterling slumped to 72.18p at one stage, its lowest against the single currency since its launch in January 1999, and a 10% fall this year.

Bank of England Governor Sir Edward George insisted the euro was recovering rather than showing 'remarkable strength', as he left a meeting of the world's leading central bankers in Basel, Switzerland.

Dealers put much of sterling's fall down to the euro's strength against the weakening dollar. It rose to a four-year best of $1.1601 before easing to 1.1584 by midday.

But Kamal Sharma of Commerzbank said: 'Since the start of the year there has been increased concern about the strength of the UK economy. 'It was going to be one of the strongest in the G7 this year, but it now may grow by just 2% and this is quite a way below trend.'

Latest figures showed export volumes fell 1% in March as Britain's goods trade gap with the rest of the world deteriorated to £3.6bn from a revised £3.5bn in February.

Despite a pick-up in business with the eurozone, the deficit with the rest of the world spiralled £300m to £2.7bn, larger than many analysts were forecasting.