The pound hit a five month low on the currency markets on Monday and further sharp falls are likely, according Mark O’Sullivan, director of dealing at Currencies Direct, a specialist foreign exchange house in the City.
Mr O’Sullivan said: “With the government carrying out a last minute fire sale of assets, the Bank of England contemplating increasing their program of QE, and interest rates likely to remain ultralow during 2010 the pound is the currency markets choice of cheap funding.
“We still could see further sharp falls as the lack of both government and central bank intervention gives the green light to sell the pound.”