Sterling weakens against euro
Sterling weakened against the euro and the US dollar, falling to e1.65 at the start of the week. The drop followed statements from the government suggesting that its level was unsustainable. However, prime minister Tony Blair told the Confederation of British Industry on Tuesday that there would be no artificial devaluation in sterling which would result in a return to repeated phases of boom and bust, reducing investment and cutting education and training budgets. The government has ruled out using proceeds from the recent mobile phone licence auction to buy euros to support that currency.