Pound Continues to Slide as King Warns of Slowdown
Sterling has further to fall
The Pound continued to slide against the Dollar and the Euro yesterday, finishing the day in London at $1.8712. The value of the Pound against a basket of foreign currencies hit its lowest level in more than 11 years.
In response to the slide, Mervyn King, governor of the Bank of England predicted a period of ‘painful' adjustments to higher commodity prices with a year of lethargic growth and contraction in GDP figures expected before a recovery would ensue.
Unemployment figures are up by more than 60 000 in the second quarter, the highest in 16 years, in evidence of this and the Pound fell yesterday in response to news that inflation would likely peak at 5%.
Economists speculate that looming recession could prompt the bank to move quicker in cutting interest rates.
Domino effect of the Crunch
Economic growth statistics released from around the world have highlighted the extensive nature of the credit crunch with most of the world's major economies displaying dismal growth statistics.
German GDP contracts by 0.5% in the 3 months leading up to June which, as Europe's largest economy, is also expected to lower the European average, which in turn is expected to be the lowest since the inception of the Euro.
Japan, the world's second largest economy, followed suit with its worst showing in seven years, growth contracting to 0.6%.