sterling

UK CPI inflation stood at 2.7% for the fourth consecutive month in January, but fears over longer-term forecasts sent sterling to a six month low in early trading.

The pound has fallen to a fresh low below €1.20 for the first time in over nine months.

HSBC says sterling will weaken this year as it faces a "triple cocktail" of potentially destructive factors from China, the US and the eurozone.

Benchmark 10-year gilt yields have moved back above 2% for the first time since last May as the equity rally is mirrored by a sell-off in core government bonds.

RBS currency analysts have said selling sterling against the US dollar represents a "top 2013 trade" as the pound rises to a ten-week high.

Sterling fell against the dollar as Chancellor George Osborne announced the UK's fiscal austerity programme would be carried through to 2018.

Mark Holman, Managing partner at TwentyFour Asset Management.

The Swiss central bank "aggressively diversified" into UK gilts in the third quarter, providing a boost to sterling, but the end of this process could be damaging to the currency, according to analysts at Nomura.

IS STERLING OVERVALUED?

The euro hit a four-month high today against the US dollar after German lawmakers said the country can now approve Europe's rescue fund.