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Reuters reports the pound was priced at 87p against its European counterpart by 08:55 BST, after the euro earlier hit a high of 87.58p.
The British currency fell as investors looked ahead to impending government budget cuts, while chancellor George Osborne's announcement that child benefits for higher-rate taxpayers will be removed by 2013 was seen by analysts as another threat to the country's struggling economy.
In addition action from Asian banks is aiding the euro, as some institutions are opting to recycle their dollar holdings, ING currency strategist Tom Levinson was quoted by the news agency as saying.
Sterling has, however, fared better against the dollar in recent days, hitting a seven-week high of $1.5896 on September 28th following the release of positive UK economic data.
Posted by Greg Secker
