Sterling fell against the euro a day ahead of gross domestic product (GDP) figures which are to show further signs of a weakening British economy.
The pound is one of the worst performers out of the G10 currencies this year, having fallen almost 10% against the U.S. dollar in 2022.
Sterling was roughly flat against a weakening dollar on the back of softer-than-expected U.S. inflation data. Traders said the UK currency’s fall against the euro gave a clearer picture of the state of the economy.
According to a Reuters poll of economists, UK GDP is to have shed 0.3% in the second quarter from a 0.4% growth in the first three months of the year.
“On the back of the U.S. CPI inflation release the market has reassessed the amount of Fed rate hikes that could be in the pipeline,” Jane Foley, head of FX strategy at Rabobank in London said.