October 7, 2008 / 8:20 AM / 12 years ago

Sterling falls on talk of UK govt funding for RBS

LONDON, Oct 7 (Reuters) - Sterling fell against the euro and dollar on Tuesday on reports the UK government may be forced to provide funding for Royal Bank of Scotland (RBS.L).

The bank’s shares were last down 30 percent at 109.2 pence. On Monday, credit ratings agency S&P cut its rating on RBS, citing earnings and further writedown risks. “RBS is weighing” trader in London said.

By 0810 GMT, the euro was up 0.9 percent on the day to 78.04 pence EURGBP=, while sterling fell below $1.74 to $1.7339 GBP=, wiping out earlier gains.

“Sterling is coming under pressure on increased concerns of the banks. Banking shres have come under pressure again today and we may see sterling testing yesterday’s low,” said Ian Stannard at BNP Paribas.

Reporting by London FX team

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