Sterling fell against the euro and the dollar, pressured by a weaker-than-forecast UK services sector survey. The British pound lost further ground against the euro as the European Central Bank announced its first steps to unwind some of the extraordinary measures it took to prop up the eurozone economy during the global crisis.

Sterling

The pound surrendered previous gains against the dollar and lost further ground to the euro as weaker-than-expected PMI data was released, which highlighted the likelihood of an under-performing UK economy. The UK service sector grew more slowly than expected in November, but new business continued to pick up and firms remained optimistic, the Charter Institute of Purchasing and Supply's survey showed.

US dollar

The dollar gained against the pound in the later session, after a survey showing an unexpected contraction in the US services sector weighed on shares and reversed the earlier rally in perceived riskier currencies. Service industries in the US unexpectedly contracted in November, contributing to concerns that mounting unemployment will hurt sales.

Euro

The euro rose against the dollar and posted its biggest gain in a month versus the yen as European Central Bank President Jean-Claude Trichet announced the first steps towards scaling back emergency stimulus lending. The euro climbed to almost its strongest level in 16 months versus the dollar after Mr Trichet told reporters in Frankfurt the need for such stimulus measures has diminished. He went on to say that the ECB's third tender of unlimited 12-month funds on December 16 will be its last and unlike the previous ones won't be at a fixed rate of one per cent.

Japanese yen

The yen came under pressure for the second straight day. The Bank of Japan said this week it would provide new three-month funding to banks to combat deflation after top officials warned that the currency had grown too strong.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/