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Pound hits near 12-year low

The pound hit a near 12-year low against a basket of currencies on Wednesday as investors dumped the currency on the view that weaker European economies would hurt the UK, which continues to suffer from the credit crunch.

Trade-weighted sterling fell to 90.4, its lowest level since October 1996, as the currency edged lower against the euro and the yen. “Sterling remains vulnerable because of perceived imbalances in the economy, both in terms of trade and because of consumer debt at a time when credit conditions are tightening and disposable income is falling,” said Paul Robson at RBS Global Banking.

Trade-weighted sterling was weaker even as the currency traded 0.3% higher against the dollar at $1.8463 as traders booked profits on a broad rally in the US currency the previous day. (Reuters)