Sterling hits eight-and-a-half-month low

Sterling has dropped to an eight-and-a-half-month low against the dollar in Forex trading today (February 5th), after investors flocked to the greenback in order to avoid risks posed by other currencies.

Worries over sovereign debt in eurozone countries caused currencies perceived as being high-risk to be sold off by traders and the pound was down 0.4 per cent to $1.5683 at 09:06 GMT, Reuters reports.

It had earlier dropped to $1.5654 - its lowest level since the middle of May last year - however it managed to record an increase against the euro, rising 0.1 per cent to 87.23p.

The drop has gone against the prediction of Duncan Higgins of Caxton FX, who said yesterday that he expected the currency to "gain steadily".

It had risen following the Bank of England's announcement that it has halted expansion of the quantitative easing scheme and maintained the base rate at 0.5 per cent.

Posted by Greg Secker