The British pound plunged on Wednesday to a record low point against the euro, tumbling towards parity, after gloomy economic data sparked renewed speculation about more deep interest rate cuts. In late afternoon trading in London, the pound dropped to 1.0767 euros - the lowest level since the creation of the European single currency in 1999. Analysts predicted that sterling was on course to reach parity against the euro amid spreading concern that Britain was very close to recession. “Sterling/euro is still the one to watch,” said Piers Cracknell, commercial director at currency specialists Moneycorp in London. “With record lows nearly every day, one pound for one euro is clearly visible on the radar. “There is no certainty it will ever be achieved. But unless the pound does get there, many investors will not be satisfied that they have had closure.” Bank of England policymakers mulled an even steeper cut when they voted 9-0 to slash interest rates earlier this month by a full percentage point to 2.0 percent, according to minutes of their meeting that were published Wednesday. Falling interest rates tend to dampen currencies because they make them a less attractive investment in terms of yields. The BoE's nine-member monetary policy committee (MPC) had on Dec. 4 cut its key lending rate to the lowest level since 1951, amid mounting evidence Britain faces a deep recession. The number of people claiming jobless benefits in Britain leapt in November.
