Sterling was up against the dollar this morning, recovering from earlier weakness against both the greenback and the euro.However, the pound was down against the euro and the yen at 08:16 GMT, marking the second day of falls against the European currency.The yen was up in trading this morning as securities weakened on the Tokyo Stock Exchange and other key Asian bourses, encouraging forex traders to use the currency as a hedge.Commenting on the performance, Philip Wee, a senior foreign-exchange economist in Singapore at DBS Group Holdings, told Bloomberg said that currencies will continue to be sensitive to downside risks in equities markets."Markets may seek safety in the yen and the dollar as they adjust their bullish positions accumulated during the March-June rebound from the crisis," he forecasted.Meanwhile, sterling was weakened by persistent concerns over the health of European economies.The uncertainty was fuelled by a report in the Times claiming that Lloyds Banking Group will post further losses next month.