Sterling rose against the dollar and euro yesterday as investors regained some risk appetite in a market calmed by a halt in the oil slide and a signal that the European Central Bank will ease policy further in March.

Mixed data showing UK government borrowing dropped sharply in December while retail spending suffered its biggest year-on-year fall in over six years, sent sterling briefly down and then back above $1.43 in choppy trade. The pound then settled at around $1.4285, leaving it up 0.5 per cent on the day.

Sterling touched a seven-year low of $1.4080 against a dollar rallying on a hint from ECB chief Mario Draghi that the central bank would add more stimulus to an already expansive easing programme at its next meeting.

Against the euro, sterling was 0.7 per cent up yesterday at 75.995 pence. That left it on track for its first week of gains in nine against the currency of its biggest trading partner, but still around eight per cent down from just two months ago.

Sterling has fallen as investors have pushed back bets on when British interest rates will start to rise and on intensifying concerns over a possible “Brexit” – exit from the Europe Union – as well as on general market risk aversion.