Sterling fell against a broadly buoyant dollar and versus the euro on Wednesday after weaker-than-expected UK mortgage data signalled the housing market may be cooling. British Mortgage approvals in March fell to their lowest level in a year, with the Bank of England saying the number of approvals -- loans for house purchases agreed but not yet made -- fell to 113,000 from 117,000 in February.
Analysts still expect interest rates, currently at 5.25 percent, will rise twice to 5.75 percent by the end of the year but the weaker-than-expected housing data on the margins cooled confidence on the second hike, said analysts.
"Mortgage approvals data diluted expectations on rate rises as it showed signs of softness in the housing market," said Geoff Kendrick, currency strategist at Westpac.
At 1454 GMT the pound was down around half a percent at $1.9903 and the euro was up 0.4 percent versus the pound to 68.30 pence. The dollar was up across the board on Wednesday after surprisingly strong growth in March US factory orders cast further doubt on how soft the US economy actually is.
Sterling's weakness, meanwhile, comes after gains the previous session after the Confederation of British Industry said its distributive trades survey reported the strongest level of retail sales in April for over three years. Services sector data will be released at 0830 GMT on Thursday.
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