Sterling fell sharply on Friday, falling more than 1 percent to a two-week low against the dollar, on concerns over the UK's fiscal health and waning investor appetite for perceived risky currencies. The pound also fell to a one-week low against the euro and a basket of currencies as it slid further in the wake of data on Thursday showing UK public finances deteriorated almost twice as fast as expected last month.
The moves were exacerbated as UK debt concerns coincided with falls in equities and commodities which encouraged traders to take profits on the recent rise in riskier currencies, including sterling, against the dollar and the yen. "Ever since yesterday, sterling has been under pressure and it is clearly one of the weaker G10 currencies," said Naeem Wahid, currency strategist at Lloyds Banking Group.
"It is likely that public finances data will be weak in the months to come, and each time we get that it will be negative for sterling". By 1543 GMT, sterling was down 0.9 percent at $1.6505, having earlier fallen more than 1 percent to a two-week low of $1.6460.
It also fell sharply against the euro, which hit a one-week high of 90.13 pence per euro, and lost more than 1 percent against the yen to a low of 146.47 yen, its weakest since November 3. This helped push sterling's trade-weighted index to a one-week low of 80.4. Sterling has erased all of the gains made on Monday when it hit a three-month high just shy of $1.69.