Weak economic data drove pound down yesterday

Sterling suffered again yesterday, after weak economic data threatened the stability of the UK economic recovery.

• Any gains that sterling made following the news that house prices rose for the fourth month in a row were offset by a far worse-than-expected realised sales figure, which added to the selling pressure already on the pound.
  
• The pound was further devalued as data also showed that UK business investment, seen by many as a prerequisite for recovery, fell by the most in 24 years, reinforcing the view that UK interest rates will remain low to revive the economy.
  
• Analysts immediately said that overall economic growth figures for the second quarter, due out today at 09:30BST, could be revised down, rather than up as some had been hoping.
  
• The pound was also undermined yesterday after the FSA chairman said that the UK financial sector might have become “too big for society.”
  
• However, in trading so far this morning, the pound has halted its slide against the single currency as investors consider locking in profits.