Sterling extended yesterday's drop, following disappointing results from Barclays Capital's investment banking unit. The currency, which suffered yesterday from a slowdown in the consumer services sector, traded 0.2% lower at $1.5843.
Investors are expecting the Bank of England to leave rates unchanged today at noon, on concerns that a tough public sector budget is already denting economic growth.
Tony Woodley, joint general secretary of Unite, the country's biggest union, said: "More than £1.5bn has already been wiped from local government spending this year and one million jobs are soon to go. The government must not play Russian roulette with recovery."
