Sterling was recovering this morning after taking a hit from UK trade figures during early trading.

News that the trade gap had widened to £4.8 billion in February from £4.6 billion in January saw the pound fall to $1.7396.

But since that initial dip sterling has returned to sit at $1.7418 a short time ago.

The trade figures were a blow for the UK economy following a period in which other economic indicators have been on track.

Interest rates have been on hold for eight months and inflation is on target.

However, the trade gap in goods and services increased to £13.2 billion during the three months to the end of February, up from £11.9 billion in the previous three months.

"The latest estimate of the trend suggests that the UK trade deficit is widening in recent months," the Office of National Statistics said in a statement.

Figures from the high street suggest that retail sales remained flat last month, but the Bank of England will be increasingly aware of the inflationary threat posed by high energy prices.