Sterling slipped on Thursday as UK borrowing data underlined Britain's deteriorating finances, while a sell-off in high-risk currencies also kept the pound under pressure. The pound fell against the dollar and hit a two-week low versus the yen, suffering along with currencies including the Australian and New Zealand dollars, which were hit by profit taking in carry trades put on earlier in the year.
Also hitting sterling was data showing Britain's public finances deteriorated at a much sharper pace than expected last month, taking public borrowing as a share of GDP to its highest on record. That data took the shine off a rise in retail sales. "The PSNCR was bad news for sterling and it is putting the debt situation back in the horizon ... it reminds us about what the ratings agencies have been saying about the UK's position," said Jane Foley, research director at Forex.com in London. By 1513 GMT, sterling was 0.7 percent lower on the day near a session trough of $1.6606.
The pound, which is often perceived as a high-risk currency, took a hit against the dollar as selling in the euro against the dollar helped push sterling lower versus the US currency. Sterling fell around 1.5 percent on the day to 147.36 yen, its lowest since November 3.
The euro edged up 0.2 percent to 89.50 pence, hovering above a two-month low of 88.33 pence hit on Tuesday, and its 100- and 200-day moving averages in the mid-88 region were seen providing significant support. Sterling hit the day's high against the euro of 89.00 pence on the back of the retail sales data, but analysts pointed out that its inability to keep those gains suggested that its rally from the past month may be running out of steam.
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