Pound at 4-month low below $1.60

The pound is continuing to weaken

The pound has hit a four-month low against the dollar, a day after the head of the Bank of England said a weak currency was "helpful" to the economy.

The pound fell as low as $1.5917, the lowest since early June and then edged back to $1.5939.

It was also hit by fears that interest rates would remain low as G20 leaders said stimulus measures would remain.

The pound is still well above the levels hit early in the year when it traded below $1.50 against the dollar.

"The G20 is making clear that a stimulus will stay in place until a recovery is sustainable," said Michael Klawitter, senior currency strategist at Commerzbank. This suggested that interest rates would remain low, he said.

It is also currently trading near its lowest levels since April against the euro.

Dollar role

At the Group of 20 summit of world leaders, Timothy Geithner, the US Treasury Secretary, said that the US had a responsibility to preserve the dollar's role as the world's main reserve currency.

The Obama administration is doing everything it can to maintain the dollar's standing and is also committed to containing US budget deficits, he added.

The pound has weakened in recent days on fears about the high level of UK debt.

Bank governor Mervyn King said in a newspaper interview that a fall in the exchange rate would help to balance the UK economy by giving exports a lift.