Sterling fell to a five-month low versus the euro on Tuesday, on expectations UK interest rate rises would lag those in the euro zone, and hovered close to two-month lows versus a firmer dollar. Data showing the UK economy shrank slightly less than first thought in the final quarter of 2010 had little currency impact. Analysts said the preliminary estimate for the first quarter of this year, due at the end of April, would be more significant.
The euro rose to 88.36 pence, accelerating after stop-loss orders were triggered on the break of Monday's high of 88.20. It eased back to 88.05 pence in afternoon trade, close to flat for the day. Sterling slipped against the dollar to trade at a session low of $1.5943, close to a two-month trough of $1.5937 hit on Monday. The greenback was broadly firmer after St Louis Federal Reserve President James Bullard hinted at normalising loose monetary policy.
Technical analysts said the pound needed to close below its February low of $1.5963 to open up further downside potential and a possible move towards the 100-day moving average at $1.5908. It was last trading at $1.5968, down around 0.1 percent on the day. The Office for National Statistics revised fourth-quarter GDP growth upwards to -0.5 percent on the quarter from its most recent previous estimate of -0.6 percent, though the new figure is still the biggest decline since the second quarter of 2009.