The pound slid to an all-time low against the euro on Wednesday as weak consumer and business confidence and soft employment data reinforced the case for Bank of England rate cuts. British consumer confidence fell to its worst since comparable records began four years ago, according to a survey from Nationwide.
Sentiment at British services firms reached its lowest point in 15 months a CBI survey showed, and permanent job appointments in Britain fell for the first time in nearly five years last month, another report showed.
The pound briefly pared losses after UK services PMI data came in stronger than expected highlighting inflationary pressures facing the Bank of England. However negative sentiment on the UK economy is overshadowing inflationary risks and markets are now pricing in three cuts from the BoE by the end of the year, which would take rates to 4.5 percent, while bets for near-term policy easing by the European Central Bank have been pared back in recent weeks.
"The fact that the strong (PMI) data only gave the pound the most marginal of boosts shows that there are deeper and darker forces at play," said Simon Derrick, head of currency research at Bank of New York Mellon.
By 1505 GMT, the euro had reached 76.89 pence, its highest since the currency was launched in 1999 and up around 4.5 percent so far this year. The pound fell to a one-week low against the dollar of $1.9723, before recovering to $1.9836.
The Bank of England is widely expected to keep interest rates on hold on Thursday. Only one of 65 economists polled by Reuters last week predicted a March rate cut with the others expecting rates unchanged at 5.25 percent.
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