Sterling got off to a poor start to the year yesterday, falling under $1.55 to a 16-month low after data showed British manufacturing expanded at a much slower pace than expected in December.

While the Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) held above the 50 threshold for growth for a 22nd straight month, the sector’s contribution to growth continued to ebb.

Separate data showed lending to British consumers surged at the fastest rate in almost a decade in the three months to November, but mortgage approvals fell, keeping pressure off the Bank of England to raise interest rates any time soon and leaving sterling weak.

The pound fell to $1.5447 after the data from around $1.5517 beforehand, down 0.9 per cent on the day.

“What we have in the Bank of England is a central bank that will not look to even think about raising interest rates until it has very good reasons to do so,” said Neil Mellor, a currency strategist at Bank of New York Mellon. “I think sterling’s going lower for 2015.”

Mellor also highlighted the risk to the currency from a looming general election in May, which could open the door to a British exit from the European Union. That would be a “huge negative” for sterling, he said.

Against the euro, the pound weakened only moderately, falling around a third of a percent at 77.75 pence.

The single currency was trading at a four-and-a-half-year low against the dollar, having been hit by an interview with a German newspaper in which European Central Bank chief Mario Draghi underlined the ECB’s readiness to take bolder action to loosen monetary policy early this year should it be necessary.