The pound fell to its lowest level against the US dollar for three months tonight after official data showed the economy growing more slowly than previously thought in the first nine months of 2010.

Data from the Office for National Statistics, shaving 0.1 percentage points off national output in each of the first three quarters of this year, dented City optimism about the UK's potential to sustain recovery from its deepest postwar recession.

Sterling dipped by a cent against the dollar, boosted by a slight upward revision in US growth, and was also down against the euro amid expectations the Bank of England would leave interest rates unchanged at 0.5% for a prolonged period.

Minutes of the December meeting of the Bank's monetary policy committee showed another three-way split, with Andrew Sentance backing action to tackle inflation and Adam Posen urging steps to boost growth. The other seven members rejected Sentance's call for rates to be pushed up to 0.75% and Posen's lobbying for the resumption of quantitative easing to pump £50bn into the economy.

The minutes said that most MPC members believed "news over recent months had probably shifted the balance of risks to inflation in the medium term upwards".

Vicky Redwood, senior UK economist at Capital Economics said, however, that the Bank seemed happy to "sit tight for now". She said: "While there is clearly a risk of a token rise in interest rates next year, especially if inflation expectations pick up further, our expectation is for rates to stay on hold for a very long time.'

The ONS said it now estimated that gross domestic product rose by 0.7% in the three months to September, by 1.1% in the second quarter and by 0.3% in the first quarter. Over the year to the third quarter, the economy expanded by 2.7%, slightly down on the previous estimate of 2.8%.

Analysts said a breakdown of the quarterly national accounts showed that the UK's trade performance continued to be disappointing despite the 25% fall in the value of the pound, but that there was more encouraging news from investment, which grew more strongly in the third quarter than originally believed.

The City was braced for a further slowdown in the pace of growth in the last three months of 2010 even before the disruption caused by December's cold weather. Most forecast GDP will rise by 0.4-0.5%.

John Hawksworth, chief economist at PwC, said he had revised his forecast for UK growth in 2010 down from 1.8% to 1.6% as a result of the ONS revisions, and was expecting the economy to continue to struggle in 2011.

He said: "Headwinds from the coming fiscal squeeze, together with expected continued weakness in the UK housing market and some of our key European export markets mean that our main scenario is for modest growth of only around 2% in 2011."