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FX round-up: Sellers pummel pound

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Date: Tuesday 18 Mar 2008

LONDON (ShareCast) - The pound fell to its worst ever versus the euro on Monday as problems at beleaguered US investment bank Bear Stearns reignited fears about UK financial issues.

JP Morgan Chase stepped in on Sunday night and agreed to pay just $2 a share for Bear, having saved the bank two days earlier with a line of emergency short term funding.

The UK is being likened to the US as it has already had one banking failure with Northern Rock, so is seen as more susceptible to a repeat.

Meanwhile, news that a Bank of England auction of more than $5bn of three-day funds was almost five times oversubscribed also put sterling under pressure.

The UK currency managed to ease versus the struggling dollar and dropped to its lowest in 20 months against the yen.

Expectations that the Federal Reserve will slash interest rates by a full 1% Tuesday had the greenback in reverse, with a lowest ever read on New York manufacturing taken badly.

The US currency fell below 96 yen for the first time in 12 years and hit a new record low against the euro.

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