LONDON - THE pound sank further towards parity against the European single currency on Thursday, sliding under 1.06 euros for the first time.In morning trading in London, sterling tumbled as low as 1.0559 euros, which was the lowest point since the creation of the single currency in 1999.
'Sterling's weakness continues unabated and is lifting euro/pound to ever new record levels,' said Commerzbank analyst Ulrich Leuchtmann.
The pound plunged on Wednesday after minutes from the Bank of England's December 4 meeting revealed that policymakers mulled a steeper cut when they voted 9-0 to cut interest rates by a full percentage point to 2.0 per cent.
'The trouble for the pound really began with the minutes of the rate decision, which drove the currency lower,' Mr Leuchtmann added.
'Not only was there again no dissenting vote at the meeting, but an even stronger rate cut was also discussed.
'That further increased the probability that the Bank of England will continue to lower the base rate.'
Earlier this month, the BoE's nine-member monetary policy committee cut its key lending rate to the lowest level since 1951, amid mounting evidence Britain faces a deep recession.
Falling interest rates weigh on currencies because they make them a less attractive investment in terms of yields. -- AFP
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