Sterling turns positive as dollar wavers and PM Truss defends economic plans

Sterling fell as much as 1% on Thursday before cutting losses and turning positive as the dollar wavered and British Prime Minister Liz Truss defended the government's economic plans.

Sterling fell as much as 1% on Thursday before cutting losses and turning positive as the dollar wavered and British Prime Minister Liz Truss defended the government's economic plans.

Truss said big tax cuts were the right path for Britain and refused to consider reversing the so-called "mini budget" laid out last week, which triggered chaos in markets.

The pound was last up 0.7% to $1.09660 after rebounding from a session low of $1.0764. The euro was down 0.73% against sterling at 88.81 pence.

Adam Cole, head of foreign exchange strategy at RBC Capital Markets, said the driver in the market was the dollar, which picked up in Asian trading but later fell back.

The dollar index was last down 0.3% to 112.65. It had earlier risen as much as 0.67% to a session high of 113.79.

Analysts said the dollar's pull-back came after the People's Bank of China told state banks to be prepared to sell the U.S. currency in favour of the yuan, which was first reported by Reuters.

Sterling crashed to a record low against the dollar of $1.0327 on Monday after new finance minister Kwasi Kwarteng unveiled plans to cut taxes, particularly for the rich, and raise borrowing.