Sterling has fallen sharply against the dollar as yet more bad economic data points towards a prolonged recession and further interest rate cuts.

The pound was down 5.2 cents to $1.486, its largest one day fall in percentage terms since sterling crashed out of the Exchange Rate Mechanism (ERM) in 1992.

Sharp falls in the FTSE 100 index - down 5.2% on Monday - also served to undermine the currency.

The pound was also down 3.5 cents against the euro, at 0.851 pounds.

The poor economic data increases the likelihood that the Bank of England will cut interest rates on Thursday.