Sterling hit a record low of 80 pence per euro on Wednesday, pressured by fears of economic slowdown and expectations that the Bank of England will cut interest rates on Thursday. Speculation of an aggressive 50 basis point rate cut, rather than just 25 basis points off the current 5.25 percent, was dampened by forecast-beating UK output data.
Although this gave the pound only a brief respite. In contrast to BoE rate cuts, the European Central Bank is seen holding rates at 4 percent on Thursday and signalling that it is not ready to start loosening policy any time soon.
The euro rose to a historic high of 80.00 pence, but had pared gains to 79.89 pence by 1403 GMT. Sterling also set an 11-1/2 year trade-weighted low of 92.0, but managed to seek out a small gain versus a broadly weaker dollar, at $1.9736.