14-01-2008
Dangers of pound's devaluation highlighted
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A fall in the value of sterling could affect the economic relationship in place between itself and the Eurozone.
Reports suggest that with a decline in the value of the pound against the euro of nearly nine per cent, it is believed that the decline could result in an economic realignment that could hurt, not only the UK, but also the members of the single European currency, reports the Financial Times.
"[It is] astonishing how quickly [sterling] has gone down", said Ben Broadbent, a representative from Goldman Sachs.
Ken Wattret, a representative from BNP Paribas, added: "It is another source of potential weakness for the eurozone economy - and there is no shortage of them."
The current speed in the decline of sterling's value is at a pace not seen since 1992, when the UK was made to withdraw from the European Exchange Rate Mechanism (ERM), introduced as a component of the European Monetary System in 1979.
One of the goals of the ERM was to reduce the variability of Europe's rates of currency exchange.
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