The British currency had its biggest decline in 4 1/2 years this month, dropping 3.1 percent, as traders bet the central bank will lower interest rates again to counter a housing-market slowdown and a global credit squeeze. Futures suggest the ECB will keep interest rates at a six-year high amid policy makers' concern about the inflationary threat to the economy.
Against the European common currency, the pound has fallen 9 percent this year, dropping to a record 73.89 pence this month. It pared the loss today, rising 0.7 percent to 73.28 pence as of 2:15 p.m. in London, from 73.78 late on Dec. 28.
The U.K. currency climbed to $2.0076, from $1.9964, heading for a 2.5 percent annual gain.