Sterling fell against the dollar and the euro on Thursday as data continued to paint a negative picture of the UK economy, underpinning expectations that the Bank of England could cut rates as early as next month.
The Nationwide building society said house prices fell this month at their sharpest rate in more than 12 years and mortgage approvals dropped to their lowest in nearly three years in October - signs the once red-hot house market is cooling fast.
"The outlook for the UK economy is very much driven by the consumer - and by extension consumer performance is underpinned by what's happening in the housing market," said Tom Levinson, FX strategist at ING.
The pound is also a key destination for the carry trade where investors borrow low-yielding currencies like the yen to fund purchases of higher-yielding assets. A rate cut from the current 5.75 percent would reduce its appeal.
At 1444 GMT the pound was down around 1.0 percent against the dollar at $2.0608, having earlier slipped below $2.06. The dollar was itself performing well against a basket of major currencies - up 0.7 percent on the day. The euro was up 0.4 percent against the pound at 71.53 pence, having hit a four-and-a-half year high last week.
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