Pound dives on UK credit rating fears

The pound crashed again today against major currencies, plunging well below $1.38 and heading back towards parity with the euro.

Fears over the state of the economy and the increasing likelihood that the Government will have to nationalise fully Lloyds, Royal Bank of Scotland and possibly Barclays have triggered a flight from the pound.

The prospect of so much debt on the country's balance sheet has triggered growing speculation that Britain may lose its AAA credit rating.

The chances of yet more interest rate cuts also weighed on sterling, which has fallen 7% so far this week.

Having lost almost five cents against the dollar by the close of play last night, today the pound fell a further 1.33 cents to just $1.3777 — its lowest since 1985. Against the euro it tumbled 1.11 cents to 1.0682.