To cause deep emotional hurt.
An archaic meaning of 'quick' is those that are living (thus biblical references to 'the quick and the dead'). It has its roots in the Old English word cwic, meaning living.
Thus, to cut to the quick means to cut deeply - either with a physical wound or, as seen in Sir Thomas More's Utopia (1551), to the limit of a person's ability to survive: "Their tenants... whom they poll and shave to the quick, by raising their rents."
Modern usage of "to cut to the quick" is usually in references to causing a deep emotional hurt, such as he was cut to the quick by her sharp comments. It can also be used as an expression meaning to cut through the inconsequential and get to the facts.
Usage of quick in this context lives on in reference to the tender flesh below fingernails and toenails - if you cut a nail too low and expose this you have cut it to the quick. Quickening is also used to describe the moment when a mother first feels her baby moving in the womb.
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