Sterling pushed to a high above 1.57 against the dollar in Asian trading on Wednesday, but then fell sharply and remained under wider pressure during the day. The UK currency recovered back to near 1.55 against the dollar from lows below 1.53 as the dollar crumbled, but weakened very sharply against the Euro with a fresh record low beyond 0.93.
The labour-market data remained very weak with a further 75,700 increase in jobless claims for November after a revised 51,800 increase the previous month and this was the fastest pace of increase since 1991. The consumer spending evidence was also very weak with the December CBI sales index registering a record low of -55 from -46 the previous month.
The Bank of England minutes from December's policy meeting recorded a 9-0 vote for a 1.0% cut in interest rates. There was talk over a further cut and the economic data will certainly reinforce fears. The bank was concerned over Sterling weakness and this may provoke some caution early in 2009.