Sterling moved erratically and the FTSE 100 remained in negative territory following inflation figures showing consumer prices dodging the effects of a weaker pound in August.
The pound initially dipped to 1.329 against the US dollar before bouncing to 1.333 and falling back down again.
Against the euro, pound was trading at 0.30% lower at 1.183.
Meanwhile, the FTSE 100 was down 0.06% or 4.2 points at 6696.8 points.
The Consumer Price Index (CPI) measure of inflation came in at 0.6% in the year to August, in line with July, but below consensus estimates of 0.7%.
Month-on-month inflation rates also came in below estimates, at 0.3% compared to forecasts of 0.4%.
The Office for National Statistics explained that rising food prices and airfares, as well as a slower-than-expected drop in fuel prices helped push up CPI. But that was offset by falling hotel, wine and clothing prices.
Alan Clarke, head of European fixed income strategy at Scotiabank, said: “I think today’s reading is a lesson that patience is a virtue.
“It is only two months since the Brexit vote. It takes much longer than that for the impact of currency weakness to feed through to end customer prices.”
“Furthermore, not all shops feel that they have the pricing power to pass on the increased import costs resulting from the weaker GBP,” Mr Clarke added.
In oil markets, Brent crude prices took a hit after the International Energy Agency reported that demand for oil was slowing at a faster pace than expected.
Brent prices dropped 1.6% to around 47.37 US dollars per barrel.
On the UK stock market, JD Sports topped the FTSE 250 after reporting record half-year profits, announcing plans to set up shop in Australia, and vowing to press ahead with European expansion despite the Brexit vote.
Pre-tax profit rocketed 66% to £77.4 million, driven by 10% like-for-like sales growth at its shops.
JD Sports was trading higher by 4.4% or 58p at 1391p.
Esure shares were also making gains on the second tier index, after the motor insurer confirmed plans to spin off its Go Compare price comparison site and line it up for a stock market listing worth around £474 million.
The company said the spin off was set to take place in the fourth quarter of the year.
Ocado Group was the biggest loser on the FTSE 250, with shares down nearly 13% or 41.8p at 280.2p.
While the grocer reported an 18.9% rise in weekly orders in the 12 weeks to August 7 compared to the same period last year, investors zeroed in on comments from chief executive Tim Steiner regarding the state of the food retail market.
Mr Steiner said the market remains “very competitive” and that sustained margin pressure was unlikely to change in the short term.