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European equity markets were boosted by the rally, however investors remained cautious as concerns about the global economic downturn continued.
It was also reported that the pound was trading at the lowest level against the dollar since 1958.
BNP Paribas senior currency strategist commented: "Sterling backed up a little bit on support from financials as we finally saw some positive news from the banks.
"But the financial sector rebound may be quite short-lived as the fundamental problems still remain"
Sterling faced further pressure after a member of the Bank of England's monetary policy committee said interest rates could be cut further, closer to US levels.
Currently, interest rates in the US are at 0.25 per cent, while British interest rates are at 1.5 per cent.
