Pound slumps on continued Northern Rock fallout

0 Comments | AFP, February, 2008

LONDON (AFP) — The pound slumped to a one-month low against the euro on concerns over the outlook for the UK economy combine with the continued fallout from news of the planned nationalisation of Northern Rock.

The Northern Rock debacle has only served to highlight just how dependent the UK economy is on the financial services sector, with consumers expected to rein in spending as they ramp up their savings.

"Sterling seems to be firmly at the bottom of the list in terms of major currencies at the moment," said Neil Mellor at the Bank of New York Mellon.

Fears of stagflation in the UK are gathering pace, with the Bank of England looking as though it will have little room to cut interest rates, given high inflation. At the same time, the parlous state of the...