Pound hits six-month low as economic gloom deepens

Sterling has weakened further just at the time when many UK holidaymakers are preparing to exchange their pounds.

Sterling was half a cent down, at less than $1.25, taking it to its weakest point since a “flash crash” in January and not far off its lowest level since early 2017.

It was also lower versus the euro, slipping close to €1.11 – close to six-month lows – and adding to anxieties for UK holidaymakers preparing to travel abroad over the summer.

Britons will find their pound does not stretch as far compared with the same time last year, when it was trading at around $1.33 versus the dollar and €1.13 against the euro.

The latest fall against the dollar extends two weeks of declines for the pound amid concerns about the weakening economic outlook, prompting speculation about lower interest rates.

A recent gloomy speech by Bank of England governor Mark Carney was taken by some as a hint that the policy makers may strike a more dovish tone on rates.

Business surveys have indicated that the UK economy probably shrank in the second quarter of 2019, leaving it potentially on the verge of recession – as a potential no-deal Brexit looms on 31 October.