The pound gained ground against the dollar on Wednesday (10 August), rebounding from a multi-week low against the greenback after weak US productivity data on seemed to trim the likelihood of a US interest rate rise later this year.

Sterling had tumbled below $1.30 against the US dollar and €1.17 versus the euro for the first time in four weeks on Tuesday, but was trading flat against the latter and 0.60% higher to $1.3081 against the former as of mid-afternoon Wednesday.

Official data released on Tuesday showed US non-farm productivity actually contracted by 0.5% annualised in the second quarter, with productivity falling by 0.4% over the past 12 months compared with an initial estimate showing productivity increased by 0.7% over the 12 months to the end of the first quarter.

"The underlying theme is still one of sluggish US growth and easy Fed policy," said Kit Juckes, global head of FX strategy at Societe Generale.

"Two bad months of US payroll data were followed by two strong months but it would take another couple of really strong months to change the underlying story."

The dollar was still feeling the effect of the disappointing economic data, falling 0.82% against the yen to ¥101.04 and 0.63% against the euro to 0.8939 euro cents.

Elsewhere, the New Zealand dollar gained ground against the yen as well as its Australian and US counterparts ahead of an expected 25 basis points rate cut from the Reserve Bank of New Zealand.

"An interest rate cut is widely expected in response to a subdued 0.4% inflation reading in the second quarter," said Chris Saint, senior analyst at Hargreaves Lansdown currency service.