Both the British Pound and the Japanese Yen declined on Wednesday due to investor concerns about global government finances and political uncertainty in Japan.

Traders began selling long-term government bonds in Europe and the US on Tuesday, reigniting fears that major economies are losing control of their fiscal deficits. This trend then spread to Japan on Wednesday.

In the British government bond market, the cost of 30-year borrowing reached its highest point since 1998. This surge made the Pound vulnerable, causing it to drop over 1% on Tuesday. Sterling’s last recorded trade was 0.07% lower at $1.3385.

Part of the concern is also related to the upcoming autumn statement or budget. At this point, markets lack confidence that the government is willing to effectively address the size of the budget deficit and the pace at which debt is growing, Reuters reports.

In Japan, the Yen fell 0.2% to 148.65 against the Dollar. This followed a 0.8% decline on Tuesday after the Japanese ruling party's Secretary-General, Hiroshi Moriyama, a close aide to Prime Minister Shigeru Ishiba, announced his intention to resign.

This resignation could potentially impact the position of Prime Minister Ishiba, who has been under pressure to step down after an election defeat.

Political instability, particularly the possibility of Prime Minister Shigeru Ishiba's resignation, is negatively affecting the Yen. This political uncertainty, along with broader worries about government finances and a key aide's recent resignation, is contributing to the currency's weakness.

Sanae Takaichi, a strong contender to replace Ishiba, is known for supporting a policy of low domestic interest rates.

The Yen showed almost no reaction to comments from Bank of Japan Governor Kazuo Ueda, who said he had discussed the economy and markets, including foreign exchange rates, with Prime Minister Ishiba on Wednesday.

Meanwhile, the Dollar fell 0.1% to 98.30 against a basket of currencies, after rising 0.66% the previous day.

The Euro also rose 0.1% to $1.1651, having dropped 0.6% on Tuesday.

Moreover, a survey released on Wednesday indicated that the eurozone economy continued its slow expansion in August. This sluggish growth occurred because a decline in the services sector was offset by better performance in manufacturing.

Investors were also focused on a series of US labour market reports scheduled for this week, particularly Friday's nonfarm payrolls report. They are looking for more information that could indicate the future direction of interest rate cuts.