The pound weakened this morning as concern over Britain's fiscal health deepened, the euro has recovered slightly from its one month low and the dollar has dropped against the yen after senior Federal Reserve officials threw cold water on hopes of a quick rise in US rates.

Pound Sterling – UK Markets

Sterling’s morning slide comes as a result of worries over UK fiscal health and the pound was pushed further by data showing that UK retail sales rose last month at their slowest pace since August. Cable fell below USD1.64 to trade at 1.638 at the moment of writing and UK currency trades at 1.104 against the euro. The cloud of Britain's borrowing needs cast a dark shadow over its economy a day before the pre-budget report in which finance minister Alistair Darling is expected to give more details on how he will reduce the GBP175 billion budget deficit.

US Dollar – US Markets

US currency fell against the yen this morning after senior Federal Reserve officials curbed speculation of a fast rate rise. These expectations came after promising jobs report sent the greenback smartly higher. Today did see the dollar climb against the euro to trade at 1.483 after reaching its strongest level since November 4th yesterday. The greenback currently trades against the pound at 1.638.

Euro – European Markets

The euro was up half a percent this morning to trade at 90.50 pence after hitting a five-week high of 91.54 pence last week. The single currency managed a modest rebound against the US dollar but this failed to build meaningful momentum and prices stayed around 1.483 for much of the overnight session.

Other Currencies – Highlights

The yen strengthened to 131.65 per euro this morning and gained against all 16 major currencies before reports that may show German industrial production slowed and the U.S. trade deficit widened.