Holidays hit as pound sinks to a new all-time low against the euro



Sterling plummeted against the euro to a new low in early trading today as one pound after commission bought less than one euro for the first time.



Holidaymakers and business travellers were faced with the dire exchange rate at the Travelex bureau in London City airport.



Last night, £99.98 could buy just 97 euros as sterling continued to plunge to all-time lows against the euro.



The pound has fallen a record low against the euro after the Bank of England revealed it considered cutting interest rates further to stave off inflation

As thousands prepared for Christmas holidays, experts warned that things would get worse and that further falls could be expected.



European breaks now cost up to 30 per cent more than this time last year, when travellers enjoyed an exchange rate of 1.40 euros for the pound.



The pound hovered around 1.08 euros on the money markets yesterday but tourist rates are always worse. Today it slumped to 1.07 euros.



Airports take advantage of travellers' last-minute panic to buy currency, factoring wide profit margins into rates and charging high commission.



Glenn Uniacke, a currency specialist at MoneyCorp, said: 'Tourist prices are eye-wateringly bad now.



'It's the first time holidaymakers have seen such a bad deal in London. Our corporate clients were a little more prepared for this fall in value and have hedged, selling sterling ahead, but no one would have bought their skiing holiday money in the summer, would they?



'The economic downturn is global, but there's a perception that the UK's problems are more acute so traders are dumping the pound.'



The pound has now fallen 14 cents against the euro in three weeks as the Bank of England slashed the interest rate to two per cent in an attempt to prevent a deep recession.



Investors are choosing to shun the pound because the UK interest-rate is below that in the euro zone and could yet fall to near zero.



Mark O'Sullivan, dealing director at Currencies direct, said: 'This is likely to get worse as more investors lose confidence in the pound.'



The gloomy economic data emerging from Britain adds more downward pressure on sterling.



The jobless claimant count topped one million for the first time in eight years yesterday as it emerged that dole queues are lengthening at their fastest rate since the Nineties recession. Short sellers are also betting on sterling continuing to fall.

