Sterling hits 11-week low of 1.1386 vs euro

Sterling hit a 10-week low of 1.1410 against the single currency yesterday, as investors remained cautious of the risks inherent in the current UK economy.

• A choppy trading session in the stock market yesterday eventually saw the FTSE closing up at 4916.8 (0.42%) but this failed to stimulate demand for the sterling which continued to lose ground against the euro.
  
• Indeed, as global equity prices rose, it was the euro which benefitted, with investor sentiment still acknowledging the positive economic figures emerging from the 16-country region.
  
• The pound also lost value on speculation that a UK report later this week will reveal that house prices rose at a slower rate in August, supporting the case for the BoE to keep borrowing costs low.
  
• So far this morning, investors have continued to dump the UK currency after the yield on the two-year gilt hit its lowest ever level.
  
• In the eurozone today the results of the German Ifo Business Climate survey are released at 09:00BST, which could have a significant impact on the currency markets