THE pound lost ground on Tuesday, falling to seven year lows against the euro ahead of the Federal Reserve's Jackson Hole conference on Thursday.
Sterling temporarily tumbled to 1.089 versus the eurozone currency in afternoon trading, hitting its lowest level since 2010, before rising back above 1.09.
Against the dollar, the pound was at its weakest point in nearly four weeks, down 0.5 per cent at 1.283.
Rival currencies were rising as investors prepared for speeches from the heads of the European Central Bank and US Federal Reserve at the Jackson Hole symposium in Wyoming later this week.
Dennis de Jong, managing director at UFX.com, said: "If (ECB president Mario) Draghi appears hawkish on Friday, then the pound could well slip to record lows.
"The euro has continued to make gains against sterling in recent months and we could see the UK currency hit an all-time low if data, such as Thursday's latest GDP reading, comes in below par or Draghi hints at curtailing QE (quantitative easing).
"The dollar has firmed up ahead of Jackson Hole, with investors considering the Fed chair's next moves.
"(Federal Reserve boss Janet) Yellen looks to have just four months left in her role, possibly leaving her in a more favourable spot to raise interest rates before the end of the year."
The weaker pound helped push the FTSE 100 up 0.86 per cent or 62.86 points to 7,381.74p, as many multinational firms on the blue chip index tend to benefit when foreign currencies are stronger.
Across Europe, the French Cac and German Dax ended the day higher by 0.87 per cent and 1.35 per cent, respectively.
In oil markets, Brent crude prices edged higher by 0.14 per cent to around $51.77 per barrel as investors waited for inventory data out of the US.
In UK stocks, Provident Financial plunged more than 66 per cent or 1,155.5p to 589.5p after the firm warned of heavy losses following a period of "substantial under-performance" and announced chief executive Peter Crook was stepping down.
The firm said the progress in turnaround efforts were "too weak" and the business was falling "a long way short" of achieving its targets.
Persimmon shares rose 45p to 2,601p as the housebuilder reported a 30 per cent rise in half year, pre-tax profits thanks to high employment levels which supported the market and mitigated the impact of Brexit-fuelled inflation.
BHP Billiton rose 28.5p to 1,394.5p after swinging to a full year operating profit of $11.8 billion (£9.2bn), and announcing it was offloading its US shale business amid floundering global energy prices.
Wood Group fell 2.5p to 572p after results showed a 77 per cent fall in pre-tax half-year profit amid challenging market conditions for its North Sea business.
Shares in Mike Ashley's Sports Direct slumped 9.7p to 397p amid news the retailer had again upped its stake in Debenhams, this time from 19 per cent to 21 per cent.
The biggest risers on the FTSE 100 were Tesco up 7.25p at 184.2p, Shire up 112p at 3,725p, Rio Tinto up 84p at 3,539.5p, and Micro Focus International up 48p to 2,291p.
The biggest fallers on the FTSE 100 were Provident Financial down 1,155.5p at 589.5p, Admiral Group down 22p at 1,970p, ITV down 1.2p to 165.7p, and G4S down 1.4p to 294.5p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here