Pound weakens against euro on investor concerns

The pound continued its slide against the single currency yesterday as data showed the UK economy shrank an unrevised 1.5 percent in the last quarter of 2008, confirming the deep recession we are currently facing. Losses then steepened after the head of sovereign ratings at Standard & Poor's said he expected more downgrades than upgrades this year, removing the risk appetite in the market that had been apparent at the start of the week. Bank of England policymaker Kate Barker later said that British economic growth may not restart until the end of 2009.

Trading has been quiet so far this morning, following the release of Nationwide’s housing survey revealing a further 1.8% decline in house prices this month, bringing the annual rate of change to -17.6%. In the eurozone this morning consumer, economic and industrial confidence data is released, whilst there are no further economic announcements due in the UK today.

GBPEUR: 1 week chart. Click on graph to enlarge.