The euro dropped to multi-month lows against the dollar and the pound in volatile trading on Wednesday. Tuesday’s weak German investor sentiment and Greece’s dismal fiscal health were still the main drivers towards a heavy sell off of the single currency yesterday.

The dollar once again benefitted from risk aversion as dollar denominated assets, as well as the safe haven currency itself, were investors preferred choice. Political news that could see an election of a Republican to the US Senate was also seen as dollar positive.

The pound held on to its recent gains as UK unemployment and claimant count figures released yesterday showed an unexpected fall. Together with higher than expected inflation numbers released the previous day, sterling continued to enjoy a period of strength.

The minutes of the Bank of England’s last policy meeting sounded neutral with no expected changes to the currently in place asset buying program which comes to an end this month. The central bank’s Governor, Mervyn King, said inflation could possibly see a rise to 3% but is confident it will fall back within the 2% target.

Today sees important economic releases in the form of UK public net borrowing and credits as well as UK business sentiment. Euro Zone PMI is up for release in Europe while across the pond the Philadelphia Fed business index will be focused on along side weekly jobless claims.