Sterling fell to a 12-day low against the dollar on Wednesday after UK jobs data was weaker than forecast, pointing to a patchy economic recovery and prompting some traders to trim long positions. The pound also reversed earlier gains on the euro, with the shared currency helped by some month-end buying by a European real-money account, traders said.
Sterling fell 1 percent against the dollar to $1.5620, its lowest since December 3, after triggering stop-loss sales below $1.57. The euro climbed 0.66 percent at 85.33 pence after briefly hitting 85.41 pence, its highest since November 22. Analysts said thin volumes and year-end profit-taking amplified sterling's losses.
"You can't really tie sterling's performance in to fundamental factors," said Adam Cole, global head of currency strategy at RBC Capital Markets. "It would make sense if there were a flow hitting a thin market and you were seeing disproportionate price movements." Trade-weighted sterling fell to 80.3, its lowest since November 5.
The euro had come under pressure earlier in the session after US ratings firm Moody's Investors Service put Spain's Aa1 ratings on review for a possible downgrade, citing concerns about its mounting debt and 2011 funding needs, and sending the euro lower across the board.
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