Sterling fell against the euro this morning before regaining ground after the Bank of England cut interest rates by 50 basis points to 0.25%.
This was bank's first emergency cut since the global financial crisis more than a decade ago.
The move, which came in response to growing worries about the coronavirus and hours before a new UK government budget plan, pushed the pound down 0.5% to 87.83 pence per euro up 0.1% against the dollar to 1.2906.
"We saw an immediate reaction" said Jane Foley a senior currency strategist at Rabobank.
"The 50 basis point move was on the aggressive side of expectations and it was a bit of a surprise that they went before the budget."
"But it is in some way reassuring that the Bank of England say they have been coordinating with the Treasury and the fact that UK authorities have prepared a comprehensive package of measures."
However by the evening Britain's currency was trading at 87.8 pence per euro - up 0.2% - while it slipped against the US dollar to 1.285.