Sterling hit fresh lows last week, following a further drastic cut in interest rates and a spate of poor economic news.

The pound dropped to a near seven-year low against the dollar and an all-time low against the euro, after the Bank of England cut its rate to its lowest level since 1951.

Currency brokers said sterling could have further to fall in the short-term — but would start to recover in the first half of next year.

The pound lost almost 3 cents against the dollar before the Bank rate cut was announced on Thursday, dropping to $1.45, the lowest level since May 2002. It steadied to end the week at $1.46 — a far cry from the $2.12 of November last year. Against the euro, it fell to fresh lows of ¤1.15, closing the week slightly up on that level, while against a basket of currencies it hit a near 13-year low.

“Sterling is likely to continue underperforming for the remainder of the calendar year and the Bank of England seem happy for it to do so,” said Marc Cogliatti at foreign-exchange broker HiFX.

However, Jeremy Cook at World First, another broker, said people looking to convert dollars or euros into sterling should think about doing so in the next three months.

He expects the pound to strengthen to $1.66 in six months’ and $1.73 by this time next year. Against the euro, he foresees a lesser rally, to 1.23 next summer and 1.28 in 12 months’ time.

“UK individuals with properties overseas or other financial commitments should put off transferring monies, if they can, for up to three months: the picture looks much better then,” said Cook.

Those with overseas property now have greater chance of offsetting losses in capital value with currency gains if they sell and convert the proceeds to sterling.

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