Pound slid further vs the euro on Friday, but has slowed its slide in trading this morning

Worries about the underlying health of the UK banking sector took sterling to its lowest point against the euro on Friday since April 27th at 1.1054.

• Britain’s currency dropped sharply against the single currency after it was revealed that Lloyds was forced to abandon a move to withdraw from the U.K. government’s asset protection plan, underlining the fragility of the banking sector.
  
• Signs of weakness in the UK and global banking sector tend to hit sterling hard given the large role that the financial sector plays in the British economy.
  
• Additionally, public sector net borrowing in the UK increased to £16.6 billion in August, which although slightly less than market expectations, was the third largest monthly borrowed amount since records began, further dampening demand for sterling.
  
• By contrast, the eurozone current account improved in July to post a €6.6 billion surplus, at positive levels for the first time since February 2008, strengthening demand for the single currency.
  
• In trading this morning, the pound has slowed its rate of decline, as sterling found some support in a Rightmove survey that revealed positive data on house prices.