The pound lost ground to the euro yesterday but recovered to close just 0.04% down

Sterling came under heavy selling pressure after the UK's credit rating came under fire, but the pound recovered to finish just marginally down against the euro.

• In early trading, the single currency advanced against the pound as European stocks rebounded and Fitch Ratings said the UK's credit rating is most at risk among top-rated nations.
  
• The pound dropped against all but one of the 16 major currencies after David Riley, head of global sovereign ratings at Fitch, said the UK needs "the largest budget adjustment."
  
• Data also revealed that the UK trade deficit widened sharply to an eight-month high in September as imports of cars surged to their highest level for more than a year.
  
• The Office for National Statistics reported the UK's global goods trade deficit widened to £7.2 billion in September from a deficit of £6.1 billion in August.
  
• However, sterling was able to recover, recouping losses on the view that the comments from Fitch added little to what was already known.
  
• In addition, the German ZEW Economic sentiment survey revealed a further drop in confidence, which dampened demand for the euro.
  
• Investors today look ahead to the Bank of England's quarterly Inflation Report at 10:30, when the central bank will set out its latest forecasts for growth and prices.