The torrid year continued for the pound as a mixture of profit taking and keynote speeches dragged sterling to near five-month lows against the dollar and a two-week low against the euro.

Sterling

Sterling slipped again to a two-week low against the euro as it continues to languish this year. A rather downbeat Centre for Economics and Business Research report forecast sterling to continue to weaken into 2010 and interest rates to remain at their current levels into 2011. Their predictions were based mainly on the UK's spiraling public debt heavily limiting economic growth.

US dollar

The dollar continued to strengthen to a five-month high against the pound after Federal Reserve chairman Ben Bernanke's comments that the central bank will be ready to tighten monetary policy as an economic recovery takes hold. This led to traders trimming up dollar-selling positions on caution that US interest rates could move up earlier than expected.

Euro

The amount of cash deposited by banks at the European Central Bank inched higher, according to data. The bank's €60 billion covered bond also continued to make progress as the total value of bonds purchased to date reached €17.352, up from €17.128 and the European Central Bank signalled that it is now 30 per cent of the way through the plan.

Japanese yen

The yen lost some ground against the dollar due to a short covering bounce. Traders looked to trim long positions due to caution over the fact that the US interest rates could move up earlier than expected. However, activity is likely to be subdued as Tokyo markets are shut for a one-day holiday and furthermore, there is a federal holiday in the US.