Sterling tumbled to an 8 1/2-month low against the dollar on Monday as the UK currency bore the brunt of risk-aversion selling triggered by jitters about the fiscal health of some eurozone countries. Worries about how eurozone states including Greece and Portugal will service their debts have prompted investors to cut their exposure to risky assets.
Analysts said problems facing Greece and other eurozone countries served as a reminder of Britain's own fiscal problems, and this may keep sterling under selling pressure. The pound fell to $1.5535 in early London trade, its weakest since late May 2009. By 1517 GMT, sterling traded 0.4 percent lower on the day at $1.5575.
The pound was still under selling pressure after falling more than 2 percent against the dollar last week, its worst weekly performance since late September 2009. The pound suffered across the board, pushing the euro up roughly 0.5 percent on the day to 87.98 pence, its strongest in two weeks. The single currency pulled back to 87.55 pence in late London trade.
Sterling fell 0.2 percent to 139.50 yen, staying close to a 10-month low of 138.20 yen hit late last week. Negative sterling sentiment was highlighted by the latest data from the Commodity Futures Trading Commission, which showed currency speculators increased their bets that sterling will depreciate, taking net sterling short positions to 33,968 last week from 27,153 the week before.