Sterling hit a one-month high against a broadly weaker dollar, extending gains following poor but better than forecasted UK public finance data. Elsewhere, the US dollar selling intensified after weaker-than-expected US housing and producer price data added weight to the view that the Federal Reserve would leave interest rates at very low levels for some time. Still, the dollar did eventually rebound from its 14-month low against the euro as the data helped to discourage the demand for higher-yielding assets.

Sterling

Sterling held steady, climbing to a four-week high against the dollar as UK public finance numbers came in grim but better than expected and helped to offset the negative impact of Qatar selling a large stake in UK bank Barclays. UK public finances suffered their worst six months on record between April and September and government borrowing more than doubled from the same period last year. However, public sector net borrowing at £14.812 billion in September was a shade less than economists had expected and analysts claimed this helped spark a slight relief rally in sterling.

US Dollar

The dollar rebounded from a 14-month low against a basket of currencies as policymakers in Europe and Asia remarked on its decline and options-related buying kept it from pushing though key levels. Concern about US currency weakness also prompted the Bank of Canada to leave interest rates at record lows, driving the greenback up two per cent against its Canadian counterpart.

Euro

The euro touched its highest level against the dollar in 14 months as the BGA exporters' association claimed that the Germany's foreign trade prospects will brighten in the coming months. Despite the likelihood of a further rise in the euro against the dollar towards record levels, the organisation went on to state that the weakness of the dollar was creating "certain problems", with auto firms, makers of machinery and equipment and the chemicals sector being hit harder than most.

Japanese Yen

The yen lost some ground against the dollar as Bank of Japan Deputy Governor, Kiyohiko Nishimura, warned that risks facing the nation's economy remain high, meaning the central bank must stick to its easy monetary policy for now.

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