The sterling lost its lustre after initially rising more than one per cent against the dollar as the dollar gained broadly in late trading. The US dollar rebounded against the euro and fell against the yen amid fears that Federal Reserve Chairman Ben Bernanke's testimony would fail to assure markets that the worst of the credit crisis is over.
Sterling (GBP)
The British pound reversed course, giving up earlier gains against the dollar as the greenback strengthened against major currencies. Data released showed Britain's budget deficit swelled to its largest in at least 60 years in the six months to September, and analysts claimed the government coffers look set to deteriorate further as the economy slows.
US Dollar (USD)
The dollar rose against the euro for a fourth day, as Mr Bernanke endorsed additional fiscal stimulus. After his testimony to the House Budget Committee the dollar advanced significantly against a basket of currencies on speculation the US government and central-bank efforts will help the world's largest economy recover from a recession before the rest of the world.
Euro (EUR)
The euro continued to struggle as the French state announced a lending package of €10.5 billion to the country's top six banks before year-end to prop up their capital reserves. However, the loans come with conditions including lending targets for retail and business customers and local authorities. Elsewhere, the German Finance Minister reiterated that there is no credit crunch in Germany due to the global financial crisis.
Japanese Yen (JPY)
The yen fell as state-backed bank rescue plans in the US, Europe and South Korea helped reduce the cost of borrowing between banks, encouraging purchases of higher-yielding currencies funded in Japan.