The pound rallied to a four-week high on Tuesday following reports that Britain's impending departure from the European Union could be delayed.

The economic impact of Britain leaving the EU will be “manageable” for the German and EU economies even though some economic sectors will be more seriously affected, according to a study commissioned by the German economics ministry.

Fears that Greece will crash out of the euro triggered a global sell-off that left London’s leading shares index at its lowest close of 2012.

BRITAIN’S banks are drawing up contingency plans in case there is a disorderly break-up of the eurozone or exit of some countries from the single currency as the sovereign debt crisis rages on, a top British regulator said yesterday.

EURO-sterling parity is becoming increasingly more likely by the start of next year. That would put pressure on Irish exporters and the tourism industry, say currency experts.