The euro hit a seven-year low against the British pound and fell versus the dollar for a second straight session on Wednesday ahead of the outcome of a euro zone finance ministers' meeting as the EU and Greece edged closer to a showdown. Any failure to find common ground on Greece's debt burden will likely put more pressure on the euro.
Sterling hit its strongest level in seven years against the euro on Wednesday, as investors bet that the Bank of England's inflation report will signal an interest rate hike sooner than markets currently expect. The euro briefly dipped below 74 pence for the first time since January, 2008, before recovering a little to trade at 74.115 pence, leaving it down 0.1 percent on the day. The BoE will publish its quarterly report on Thursday morning, with the vast majority of economists polled at the end of last month expecting the central bank to revise down its inflation projections after a dramatic fall in energy prices. Some reckon that a fall in inflation expectations would mean the BoE would keep rates lower for longer so as not to jeopardize growth. But in a speech in Dublin last month, BoE Governor Mark Carney said lower oil and food prices were "unambiguously positive" for Britain.
Gold fell to a one-month low on Wednesday as the dollar strengthened, while caution prevailed in wider financial markets ahead of a meeting of finance ministers that is set to discuss Greece's future in the euro zone. Spot prices are down nearly 5 percent so far this month as the strong dollar and expectations of an interest rate rise in the United States weighed on investor sentiment.