Pound Drops to Lowest in Four Months as European Crisis Spreads

The Great Britain pound fell to the four-month low against the US dollar and to the three-month low versus the Japanese yen on concerns that the spreading European crisis may negatively affect the UK economy.
Paul Fisher, the Executive Director of the Bank of England’s Market’s division, warned UK companies to prepare for a potential dissolution of the eurozone, saying:

No one is trying to anticipate a euro breakup, but you just can’t rule it out.

Yield on 10-year gilts declined 13 basis points to 1.65 percent, following earlier drop to a record low.
Previously, problems in the European Union had positive effect on the sterling. It looks like the trend has changed now. It is hard for Britain’s economy, which is fragile by itself to ignore the impact of the European crisis, so the nation’s currency is plummeting.
GBP/USD traded at about 1.5474 as of 5:24 GMT today after it touched 1.5461 — the lowest level since January 20. GBP/JPY dropped from 122.35 to 121.86 and the daily minimum was at 121.75 — the low last seen in February 14.

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