Pound falters on tumbling housing shares and M&S warning

LONDON (Reuters) - The pound fell broadly on Wednesday as tumbling housing shares and a profit warning from retailer Marks and Spencer cast a further shadow over an already slowing economy.

Confidence in the housing sector was knocked after Taylor Wimpey (TW.L) failed to complete a capital raising. Its shares fell more than 50 percent, leading others south -- including Barratt Developments (BDEV.L).

Separately, shares in Marks and Spencer (MKS.L) hit a 7-year low after the clothes, food and homewares group issued a shock profit warning, adding that others were likely to follow suit in a deepening consumer downturn.

Analysts said sterling was feeling the pinch of deteriorating economic conditions, set against the impact of rising price pressures.

"Some of the numbers are horrendous, all the news is dreadful and really sterling should be in big trouble," State Street currency strategist Lee Ferridge said.

"Our data shows that people have been long of sterling but they are starting to unwind that position. For me with euro/sterling, given the data we're seeing we should be at all-time highs," he said.

By 3:25 p.m. British time, the euro was up 0.6 percent at 79.58 pence but still some way off the record high seen in April at 80.98 pence.

The euro was gaining broader traction, having earlier hit a 2-month high versus the dollar at 1.5873 as markets anticipated a well-telegraphed European Central Bank interest rate hike to 4.25 percent on Thursday.

Analysts also cited jitters ahead of Thursday's U.S. employment report.