The pound was on track to post its worst month since the European Union referendum in June, making it the worst-performing currency in the world, despite reports that the Bank of England Governor Mark Carney could retain his role until 2021.
In October, sterling was dealt a serious blow the prospect of a so-called 'hard Brexit' and was poised to post its worst monthly performance since Britain voted in favour of leaving the EU in June, as well as its sixth consecutive month of losses against the US dollar.
News that Carney could remain in his role at Threadneedle Street for another five years boosted the pound earlier in the day, but the feel-good factor was short-lived and, by early afternoon, sterling was 0.12% lower against the dollar, trading at $1.2162.
The pound fared marginally better against the euro, gaining 0.21% against the common currency to fetch €1.1111.
The UK currency had wavered over the weekend, as speculations mounted over Carney's future, with some going as far as suggesting the BoE Governor was ready to step down amid increasing political pressure.
However, a report by the Financial Times late on Sunday (30 October), quashed those rumours, hinting instead that the 51-year-old was planning to serve his full eight-year term despite his critics' campaign for him to resign.
"This is big news for UK assets, the pound had a mini pop higher during the Asian session, but there could be more to come," said Kathleen Brooks, research director at City Index.
"If this story is true, then it is a beacon of stability during a period of uncertainty for the UK economy, which should benefit the currency and stocks alike."
However, Jameel Ahmad, market analyst at FXTM, warned the speculations surrounding Carney's future could be detrimental in the short-term.
"There are still clearly no buyers for the Pound in this current environment and the recovery of losses seen last week should be seen as exactly just that, a recovery of losses," he said.
"These ongoing headlines over BoE's Governor Mark Carney's future does present a risk to investor sentiment over the shorter term."
Elsewhere, the dollar was on the front foot against both the euro and the yen, gaining 0.34% against the former and 0.27% against the latter, to trade at €0.9132 and ¥105.02 respectively. With just over a week until the US elections and the Federal Reserve meeting due on Wednesday, there is plenty on the table that could influence the US markets, although economists expect the dollar to continue its upward trend.
"The dollar gains are likely to continue, particularly against low-yielding currencies," said analysts at Morgan Stanley.
"With the market pricing not even a full hike over the course of 2017, risk-reward is skewed toward the central bank sounding more hawkish, which would push dollar higher."