The pound continued its recent falls gainst the euro to new five-month lows today as UK consumer confidence worsened, but still managed to gain against the dollar.
Sterling fell to €1.134 from close to €1.150 yesterday after data showed the Nationwide Consumer Confidence index fell nine points to 53 last month, its lowest level in a year.
But signs from Washington that the Federal Reserve is set to launch quantitative easing asset purchases are undermining the dollar and meant the pound held its level close to $1.59.
Mixed jobs figures that showed the British unemployment rate falling but benefits claimants rising had little impact on the pound, but contained evidence that the UK labour market is beginning to suffer from slowing growth.
And sterling took some strength overnight from a warning by Bank of England policymaker David Miles who said inflation will remain out of control for years.
After figures yesterday showed consumer inflation held stubbornly firm above the 2% target at 3.1% last month, Miles said inflation was 'uncomfortably' high.
He said it was too early to raise interest rates but admitted that whatever the Bank did there was a good chance it would turn out to be wrong.
The statement would appear to rule out any sudden move towards quantitative easing on the monetary policy committee - a possibility that has been behind much of sterling's weakness versus the euro in recent months.
The MPC has cut interest rates to 0.5% and pumped £200bn of newly minted cash into the economy through its quantitative easing programme but is now split over whether it should raise rates, print more money, or stay in 'wait and see' mode.
