The pound hit a one-week low against the dollar on Wednesday (15 February), after investors took data showing the UK unemployment rate remained at a multi-year low as a sign the Bank of England will not be rushed into an interest rate rise.
By mid-afternoon, sterling was 0.41% against the dollar, trading at $1.2416 and 0.18% lower against the euro, exchanging hands at €1.1765.
According to the Office for National Statistics (ONS), the unemployment rate in the final quarter of 2016 stood at 4.8%, in line with expectations and unchanged from the 11-year low recorded in the previous quarter.
However, basic salaries grew only 2.6% in the three months to December, down from a 2.7% gain in the previous month and falling short of forecast for an unchanged reading.
"Weaker signs of domestically induced inflation pressures will take some heat off the Bank of England to need to think about lifting interest rates in the near term, although confirmation that the UK jobless rate remained steady at an 11-year low of 4.8% suggests the economy's wider resilience is not yet coming under threat," said Chris Saint, senior analyst at Hargreaves Lansdown currency service.
Across the Atlantic, the dollar was on the front foot against the majority of its rivals, after Janet Yellen told the Senate Banking Committee that interest rates are likely to rise sooner rather than later.
The greenback was up 0.50% against both the yen and the Swiss franc, trading at ¥114.83 and CHF1.0112 respectively and gained 0.45% against the euro to 0.9496 euro cents. The dollar was also 0.21% and 0.39% higher against its Canadian and Australian counterparts, fetching CAD$1.3103 and AUD$1.3092 respectively.
Speaking to the US Congress on Tuesday, the Federal Reserve chairwoman said it was too early to know what policy changes will be put in place by the Donald Trump's administration, or how their economic effects will unfold.
"While it is not my intention to opine on specific tax or spending proposals, I would point to the importance of improving the pace of longer-run economic growth and raising American living standards with policies aimed at improving productivity," she added.
"I would also hope that fiscal policy changes will be consistent with putting US fiscal accounts on a sustainable trajectory."
However, Craig Erlam, senior market analyst at Oanda, argued Yellen, who will address the House Financial Services Committee at 3pm GMT today, might have to do more to convince the markets a hike in interest rates is imminent.
"[Yesterday's] statement only pushed up the probability of a rate hike in March from 13% to 18% so if Yellen is serious about sending a signal to investors that March is an option, she'll have to try much harder during today's testimony and even mention March specifically as being possible," he said.