LONDON: Sterling fell back below $1.43 on Tuesday, hit by worries about last week's budget and a retreat of capital to the perceived security of the dollar after explosions in Brussels.
A warning from ratings agency Moody's on the outlook for Britain's public finances added to concerns about the 2016/17 budget, which was attacked over the weekend by members of the ruling party for its "unfair" cuts to welfare.
Chancellor George Osborne is on the verge of missing his target for cutting the budget deficit in the current financial year, official data showed on Tuesday.
Consumer inflation numbers also offered the pound no support, coming in slightly below forecast and still nailed close to zero in both annual and monthly terms.
Sterling, which fell to seven-year lows last month on worries about June's referendum in Britain on European Union membership, lost 0.6 percent to $1.4283, the biggest fall of any of the major traded currencies against the dollar. It was also down a third of a percent at 78.35 pence per euro.
"Initially sterling was under pressure from the risk aversion due to the explosions in Brussels," said Credit Agricole strategist Manuel Oliveri.
"There was also the argument that terrorist attacks in Europe will make a Brexit more likely. I think that is going a bit far, and in general we think sterling should bottom out around these levels."
More broadly, the pound has recovered since reaching $1.38 after the June 23 referendum date was announced.
But while a big speculative push against the currency has so far failed to materialise, bankers say the issue is being much discussed both by corporate and fund investors.
They worry that leaving the EU would hit growth and threaten the huge foreign investment flows Britain needs to fund its current account deficit, one of the biggest in the developed world at about 4 percent of national output.
A poll last week showing the "Out" campaign inching in front led to a sharp dip in the pound.
"Brexit worries seem to be picking up again," said John Hardy, head of FX strategy at Saxo Bank. "The pound may have done all it can for now after pushing to $1.4500."
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