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LONDON (Reuters) - Sterling fell to session lows against the dollar and the euro on Tuesday after Fitch ratings agency described the fiscal challenge facing the UK as "formidable."
Following an unprecedented economic and financial shock, Fitch said "the scale of the UK's fiscal challenge is formidable and warrants a strong medium term consolidation strategy - including a faster pace of deficit reduction than set out in the April 2010 Budget.
Sterling fell more than half a cent against the dollar, hitting a session low of $1.4382, while the euro hit a high for the day of 82.91 pence.
"The Fitch announcement certainly accentuated the move lower in sterling, taking it down through $1.4400 and triggering stops of some nervy longs," said Richard Wiltshire, chief FX broker at ETX Capital.
Reporting by Jessica Mortimer