LONDON — The British pound slid on Wednesday as the Bank of England forecast a "highly uncertain" economic recovery, while gold surged to a record high on the back of the weak dollar, traders said.
In late morning tradig here, sterling fell to 1.1050 euros and 1.6620 dollars.
The euro rose to 1.5031 dollars and the US currency increased to 89.90 yen.
On the London Bullion Market, meanwhile, gold scored a record 1,117.83 dollars per ounce, as the weaker greenback stimulated demand for the precious metal.
The Bank of England warned on Wednesday that the strength of Britain's economic recovery from the country's longest recession on record is "highly uncertain" amid "sharply" rising inflation.
Analysts said the study indicated that British interest rates would remain close to record low levels of 0.5 percent for some time.
Addressing media after the report's publication, BoE governor Mervyn King said Britain has "only just started along the road to recovery."
The country has yet to follow the United States, Japan, Germany and France out of recession following the world's strongest downturn since the 1930s.
Elsewhere, the dollar was under pressure although remarks by US Treasury Secretary Timothy Geithner, who reiterated that a strong greenback was "very important" to the United States, had little impact on the market, traders said.
In Asia, traders digested data showing Japan's core machinery orders jumped 10.5 percent in September from the previous month, while Chinese industrial output grew 16.1 percent in October year-on-year.
"The data out of Asia remain firm, and the engine for the global growth recovery continues to hum along," Barclays Capital analyst David Forrester said.
Higher-yielding currencies such as the euro tend to benefit from increased investor appetite for risk, particularly against the dollar, which is seen as a relatively safe bet in times of economic uncertainty.
Traders largely overlooked remarks from Geithner, who told reporters during a visit to Tokyo: "I believe deeply that it's very important for the US and the economic health of the US that we maintain a strong dollar."
US officials regularly express their backing for a "strong dollar" but have done nothing to arrest its slide, which is good for US exporters.
With US markets closed Wednesday for Veterans' Day, investors were looking ahead to earnings reports from US retailers due later this week to gauge the state of US consumption -- a major pillar of the economy.
The euro may get support ahead of Friday's third quarter gross domestic product (GDP) figures for the eurozone, dealers said.
"A stronger-than-expected number in the eurozone would be a good sign for the market, particularly after the surprising contraction" in the British economy in the same period, said Calyon analyst Sebastien Barbe.
In London on Wednesday, the euro was changing hands at 1.5031 dollars against 1.4985 dollars late on Tuesday, at 135.14 yen (134.63), 0.8968 pounds (0.8952) and 1.5104 Swiss francs (1.5101).
The dollar stood at 89.90 yen (89.82) and 1.0048 Swiss francs (1.0074).
The pound was at 1.6759 dollars (1.6739).
On the London Bullion Market, the price of gold jumped to 1,115.47 dollars an ounce from 1,101.50 dollars an ounce late on Tuesday.
