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The Lloyds Bank Corporate Markets index of job security showed that employment sentiment had fallen to the lowest point since the gauge began in 2004, Bloomberg reports.
Sterling dropped 0.2 per cent to 82.59 pence per euro this morning after an initial rise to 82.22 pence. It moved up 0.1 per cent to $1.5445 and remained little-changed against the yen.
Jane Foley, a senior forex strategist at Rabobank International in London, told the news provider the increased strength of the euro was also an important factor in sterling's drop.
"The markets could be reacting well to reports that Merkel and Sarkozy will be looking at ways to support growth," she added.
Investors predicted last week that sterling would continue to make gains on the common currency as eurozone debt problems spook the market.
Posted by Clive Arneil
