The US dollar fell back after disappointing US economic data sapped demand for the greenback. US consumer confidence figures disappointed, as did US new home sales, prompting a sell off of the US currency.

The dollar index, which measures the value of the dollar against a trade weighted basket of currencies, eased to 77.945 from 78.245 the day before.

Sterling was also out of favour after the release of the minutes from the most recent meeting of the Bank of England’s Monetary Policy Committee (MPC) revealed that policymakers voted unanimously to keep interest rates at 0.5% and their programme of quantitative easing (QE) at £200bn when they met earlier this month.

The minutes indicated that the MPC is unsure whether the UK economy is truly on the mend, leaving open the possibility that the QE programme could be extended in February.

That prompted traders to sell sterling, and the UK currency fell against the US dollar and the euro.

At one point sterling dipped to $1.5924, before recovering to around $1.5950 towards the end of the afternoon trading session in London.

The euro moved up to an eight-day high against the pound of 89.73p.