The pound fell sharply against other major currencies yesterday on news that the UK’s trade deficit had widened.

Sterling dropped by nearly two cents against the US dollar to just above $1.46 while it fell by a cent against the euro to €1.1650.

It was also down against the Japanese yen and other foreign currencies after figures from the Office for National Statistics (ONS) showed that gap between the UK’s imports and exports hit a massive £7.5bn in March.

The deficit — well ahead of an upwardly revised £6.3bn for |February — came as total imports surged £1.4bn over the month compared with a meagre £200m rise in exports.

Exports are sluggish despite the fastest monthly growth in nearly eight years from manufacturers over the month and a weak pound — dealing a blow to hopes that trade could help a still |fragile UK economy pull away from the impact of recession.

The figures showed export prices up 2.9% over the month, outstripping a 2.7% rise in |import prices.

Vicky Redwood, of Capital Economics, said underlying export prices had risen 4.5% since |November and added: “Exporters still seem to be using the lower pound to boost their export |margins, rather than increase market share.”

Meanwhile, fresh concerns about the EU debt crisis, coupled with inflation fears, sent gold prices to record highs yesterday.