Sterling slipped against the euro on Friday, closing in on a near seven-month low as the pound stayed on the back foot after Bank of England minutes earlier in the week suggested more quantitative easing may be in store. But losses were capped as investors anticipated the outcome of a Group of 20 finance ministers meeting, while some in the market believed that recent selling pressure on the UK currency had run its course for the moment.
Weak UK retail sales data on Thursday had knocked the pound through 89 pence per euro, as it leant weight to the view that Britain's economic recovery is faltering, just after the government outlined details of painful budget cuts this week. In late London trade, the euro was up slightly on the day at 88.70 pence after climbing as high as 88.89 pence, boosted after a stronger-than-expected German IFO survey. Technical analysts said a close above resistance at 88.95 - a 61.8 percent retracement of the down move from just above 94 pence in October 2009 to just below 81 pence in June this year - would act as a catalyst for further sterling losses.
At the same time, 89.00 pence was also seen as a resistance level as that was where a trendline, drawn through the 2008 high of 98.05 pence and 94.13 pence hit in October 2009, lay on Friday. The pound slipped a touch to $1.5690, hovering near a one-month low of $1.5650 hit on Wednesday. It is poised to end the week 1.7 percent lower, as the dollar has risen on short covering following hefty losses suffered in the past month.
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