Sterling dipped against the euro on Wednesday and hit a two-week low versus the dollar ahead of Thursday's widely-expected Bank of England interest rate cut. The BoE is expected to cut interest rates by 25 basis points - following December's cut to 5.5 percent - to boost consumer confidence and ease a slowdown in economic growth.
"Sterling's been a peculiar one this week...It's going to be slightly on the backfoot with expectations of a (BoE) rate cut on Thursday," Daragh Maher, senior currency strategist at Calyon, said.
"I think the bank will make a statement saying "look we're not in a rush to cut again" and I think you'll see sterling recover on that." At 1507 GMT, sterling was down 0.2 percent against the dollar at $1.9593 while the euro made almost a 0.2 percent gain to 74.71 pence.
A Reuters currency poll of over 60 analysts said sterling will remain under $2 throughout 2008. Sterling is expected to be at $1.97 in one month, and down to $1.89 in a year's time, the poll said, but will strengthen against the euro. Earlier in the day, data from Nationwide showed consumer confidence in Britain fell to its lowest point in nearly four years, while the KPMG/Recruitment Employment Federation report showed wages growing at their slowest pace in nearly two years.