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According to Reuters, sterling was down to the day's low of $1.5878 due to a weak reading of UK retail sales that suggested consumer demand was not very high during the festive period.
The figures revealed a 0.8 per cent decrease month-on-month in December, not as good as the 0.3 per cent decline predicted.
And it was the worst annual performance in a December since yearly records began in 1988.
Before the announcement, the pound was down to a two-week low against the euro as the single currency rose in anticipation of the retail sales statistics.
This all comes after higher than expected inflation data was revealed earlier in the week.
Paul Robson, currency strategist at RBS, said: "A lot of people see higher yields are positive for a currency ... but the risk is that given fiscal austerity, people will increasingly focus on the possibility of stagflation."
Posted by Greg Secker
