Thursday, January 08, 2009
By Carsten Volkery
Sterling-shock, pound zero, the one-pound euro. For weeks now, Britain's tabloids have been painting a dark picture of an approaching national trauma. There were moments when it seemed like everything was over: The proud sterling, outflanked by the euro, was ridiculed as a "toilet paper currency." In recent days, the wobbling pound has recovered slightly, but the P-word is still on everybody's lips: Parity.
Reports trickled in of British tourists receiving less than one euro in exchange for the pound. The Sun even calculated that so-called "booze cruises" across the English Channel to buy beer and wine at once bargain prices were no longer worth it, since alcohol in France has become much more expensive. Even the left-leaning Guardian lamented: "Mamma mia! Has the financial crisis really made us poorer than the Italians?"
In the past year, the pound has lost around one-fourth of its value. At the start of this week, the currency's precipitous fall was halted, for the time being, by markets expecting the European Central Bank to reduce interest rates and speculating against the euro. Still, with Britain especially hard hit by the financial crisis, the pound remains under pressure....(Click for remainder).