LONDON: Sterling stayed near a one-month low against the euro on Tuesday ahead of UK industrial and manufacturing data that could weigh on the currency if they increase concerns about a weakening UK economy and the possibility of more monetary easing.
UK manufacturing output due at 0830 GMT is forecast to be weak, sliding by 4.1 percent month-on-month while the wider measure of industrial output drops by 3.4 percent.
"Sterling is pretty much out of favour across the board. It's looking really vulnerable and these weak figures just keep on coming," said Richard Driver, analyst at Caxton FX.
"We definitely could see the euro test 80 pence, though the figures would have to undershoot even these low expectations."
The euro edged up 0.1 percent to 79.54 pence, close to a high of 79.63 pence hit on Monday, which marked its strongest level since July 6 and took it close to the psychologically important 80 pence level.
Sterling's trade-weighted index was at 83.2, matching Monday's one-month low and weighed down mainly by losses against the euro.
The euro has recovered broadly in recent days on expectations the European Central Bank may take action to lower borrowing costs for Spain and Italy.
Analysts said this has refocused the minds of investors back onto poor UK economic fundamentals, which had previously taken a back seat due to the market's focus on euro zone debt problems.
More weak data would increase the likelihood of downgrades to growth and inflation forecasts in the Bank of England's quarterly inflation report on Wednesday. This would open the door to more quantitative easing or a cut in interest rates in the coming months.
Surveys last week showed growth in Britain's dominant services sector slowed last month while manufacturing activity shrank. These suggest a poor start to the third quarter after the economy contracted more than expected in the first half of the year.
Investors are increasingly concerned that a recession in the country may be deepening, making it difficult for the government to achieve its targets for reducing the deficit.
Against the dollar, the pound was steady at $1.5609.
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