The pound fell to a six-week low versus the euro and closed in on an all-time low on Wednesday, as data showed consumer spending faltering and problems in the banking sector dented sentiment on the economy.
Household spending growth ground to a virtual standstill while inventories shot up at their fastest rate in 20 years, Office for National Statistics data showed.
Meanwhile shares in Britain's largest mortgage lender HBOS fell by as much as 10 percent after it missed 2007 profit forecasts and reported a fall in net interest margins and a higher writedown on risky assets.
"The uncertainty factor is an issue, there's uncertainty about the economy with data showing the worst is to come and there are problems at the banks, which is not supportive of the pound," said James Knightley, senior economist at ING.
At 1504 GMT, the euro was up 0.6 percent at 75.80 pence. It hit a session high of 75.91 pence - its highest since mid January and within sight of an all-time high of 75.99 pence.
The pound rose against a broadly weaker dollar to $1.9903, up about 0.2 percent on the day, but remained off an earlier two-month high near $2.