Sterling edged lower against the euro yesterday, but has founds slight support in trading this morning

Having touched on twelve-day low against the euro in early trading, the pound recovered most of its losses to close the day just 0.1% lower at 1.1083.

• The single currency found early support after a strong reading of German business sentiment, which exceeded forecasts, instilled some optimism about the euro zone economy.
  
• The firmer than expected German sentiment survey offset worries over the banking sector brought on following reports that German regional bank WestLB was struggling to secure funding.
  
• The Bank of England's Treasury Select Committee remained cautious on the strength of the economic recovery yesterday saying that the UK economy still faces "profound challenges," fueling speculation the bank may extend asset purchases as the recession persists.
  
• The Bank's testimony offered little new insight into the outlook for monetary policy, which kept pressure on the UK currency.
  
• Market participants added that reports from ratings agencies focusing on the weakness of major banks around the world were also weighing on sterling, given the economy's dependence on financial services.
  
• This morning the pound has moved higher following the 0.1% upward revision of the UK's 3rd quarter GDP figure to -0.3%.