A difficult 24 hours for sterling saw the pound fall against both the euro and the dollar.

Standing at 0.5600 to the dollar and 0.6783 to the euro, the spectre of rising oil prices hit the pound hard.

Minutes from the Monetary Policy Committee stressed the potential for oil prices to impact on the UK economy, while the imminent approach of Hurricane Rita on the Gulf Coast refineries has set investors nerves jangling.

However, with Rita being downgraded today to Category 4 there were those on the other side of the Atlantic who expressed more optimistic views on the potential impact of the hurricane on the dollar.

BNP Paribas currency strategist Ian Stannard told AFX that oil prices had fallen back slightly after yesterday's spikes, prompting renewed hope among investors.

"The dollar is regaining strength following the recent corrective activity as Hurricane Rita was downgraded to a Category 4 storm and appeared to be changing course away from the main oil refineries," he said.

News from the National Hurricane Centre that the storm might weaken further before it gets inland could yet see the dollar rise further ahead of the hurricane's arrival.