Sterling Retreats From 2 Week High Vs Dollar

Sterling slipped against the dollar and yen on Wednesday, retreating from a two-week high against the U.S. currency set Tuesday as falling stock markets prompted a bout of profit-taking.

At 9.45am GMT the pound was $1.5405, around a cent below Tuesday's high, but still six cents or so better than last week's levels.

The currency rose yesterday after gains by stocks boosted demand for higher-yielding assets. The pound rebounded from earlier declines after Prime Minister Gordon Brown proposed a budget this week that would create the largest deficit among the Group of Seven nations to battle a looming recession.

European and UK equities fell, as investors eased back on risky assets after rallying in the first days of this week.

The pound's buoyancy could be short-lived as policy makers will cut its benchmark rate to at least 1.5 percent from 3 percent, according to some analysts.