The pound fell to a new low against the euro today as British consumer confidence waned and demand for permanent staff was the lowest for five years.

The euro reached 76.87 against sterling this morning - the highest rate since its introduction in 1999. Sterling also fell to a one week low against the dollar at $1.9784 as the number of people placed in permanent jobs in the UK declined to a five-year low.

The Nationwide consumer sentiment index for February, fell to its lowest level since May 2004. Accountancy firm KPMG and the Recruitment and Employment Confederation said today that demand for permanent staff was at its weakest since May 2003

Nationwide reported a three point decline in its index to 78 last month, as consumers grew more concerned about rising food and fuel costs and tightening lending conditions.

The Bank of England's Monetary Policy Committee (MPC) is widely expected to keep the interest rates unchanged at 5.25 per cent tomorrow, as inflation worries out ranked concerns about the flagging housing market.

However, analysts predict the MPC will reduce the borrowing cost three times by the end of the yeat to 4.5 per cent as the economy is expected to show more signs of weakening.

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