LONDON: The euro struck its highest ever level versus the British pound on Wednesday as Britain stands on the verge of recession, analysts said.
The euro reached 0.8779 pounds — the highest level since creation of the European single currency in 1999.
In later London trading, the euro stood at 0.8743 pounds compared to 0.8760 pounds in New York late on Tuesday.
"The recent plethora of bad (British) data and survey evidence relating to retail sales, unemployment, service sector activity, manufacturing output and construction activity highlight that the economy has taken a major turn for the worse," IHS Global Insight analyst Howard Archer said on Wednesday.
"Meanwhile, despite benefiting from a markedly softer pound, (British) exports (in 2009) will be limited by muted global growth, especially recession in the eurozone and US."
Elsewhere on Wednesday, the euro was unchanged at 1.2923 dollars.
Against the Japanese currency, the dollar rose to 92.47 yen from 92.11 yen late Tuesday.
The yen lost ground as rebounding Asian stock markets and hopes of a bailout of US carmakers weighed on the so-called "safe haven" currencies, traders said.
The dollar, which along with the yen has been seen as a safe haven during the economic crisis, may lose its shine if market jitters subside, dealers said.
The dollar "will drift lower once market tension and risk aversion over the financial crisis wanes" early next year, said Bank of Tokyo-Mitsubishi UFJ chief analyst Osamu Takashima.
US president-elect Barack Obama has promised the largest-scale public works scheme since the 1950s to boost jobs and long-term productivity but "to think that it could turn around the economy is a little naive," said Takashima.
Markets were waiting for US inflation and retail sales data due this week to gauge the health of consumer spending, a key pillar of the economy.
Eyes are also turning to an interest rate decision next week by the US Federal Reserve, which is widely expected to cut lending rates again from the current level of 1.0 percent.
In London trading on Wednesday, the euro changed hands at 1.2923 dollars against 1.2923 dollars late on Tuesday, at 119.82 yen (119.06), 0.8743 pounds (0.8760) and 1.5607 Swiss francs (1.5577).
The dollar stood at 92.47 yen (92.11) and 1.2043 Swiss francs (1.2055).
The pound was at 1.4820 dollars (1.4748).
On the London Bullion Market, the price of gold rose to 785 dollars an ounce from 767.75 dollars late on Tuesday.
