The pound slid to its lowest in nearly a year against the dollar on Monday, pressured by a spike in global risk appetite and further evidence that the UK housing market is heading for a sharp downturn.

The pound -- which has the highest interest rates in the Group of Seven industrialised nations -- had benefited from the carry trade where investors borrow low-yielding currencies to fund purchases of higher yielding assets.

However, fears that economic troubles are spreading beyond the United States sent high-yielding currencies lower.

"People are coming to the view that it's not just the U.S. that's going to suffer," said Neil Mellor, currency strategist at Bank of New York Mellon. "The dollar has been the default beneficiary as it's no longer a no-brainer to sell the dollar as markets fall."

By 2:24 p.m., the pound was down 0.35 percent versus the dollar, to around $1.9470, having fallen to $1.9461, its lowest level since March. It fell by over 1 percent versus the yen, to as low as 205.72, its lowest since May 2006.

A broadly weaker euro was down 0.4 percent at 74.43 pence.

Annual house price inflation in England and Wales fell to its lowest since December 2005, backing the view that the housing market is heading for a sharp downturn, a survey by property Web site Rightmove showed.

Sterling has fallen from its November peak of over $2.11 to below $1.95 as a raft of negative economic news has increased expectations that the Bank of England is set to cut interest rates by as much as 100 basis points this year.

In further bleak news for the economy, British public sector borrowing rose more than expected last month leading to the largest deficit for a month of December since records began, data showed.

Sourced by Reuters.