Sterling rallied against the euro on Thursday after upbeat data on the UK services sector and less hawkish than expected comments from the European Central Bank shifted the interest rate outlook.
Britain's service sector grew at its fastest pace in three months in October, according to Chartered Institute of Purchasing and Supply data, giving a better than forecast reading of 56.1 and wiping out talk of a rate cut in November.
The European Central Bank left interest rates unchanged at 2 percent as expected and ECB President Jean-Claude Trichet repeated wording from the previous monthly policy statement, dashing talk of an early rate rise.
"The fact that the ECB left rates unchanged and did not say anything new has taken the wind out of the euro as it points to unchanged rates in December," said Geraldine Concagh, economist at AIB Group Treasury.
"The data out of the UK continues to point to the likelihood that interest rates will remain on hold, for now anyway, and that is reflected in stronger sterling."
Sterling strengthened by nearly half a percent to 67.59 pence per euro by 1530 GMT, its highest since Monday.
The pound was steady against the broadly stronger dollar at $1.7745, finding independent support from the UK services data.
Sterling was quoted at a one-week high on its trade-weighted index, at 100.5.
The UK data added to a recent list of strong figures that have dampened expectations of a rate cut, after the BoE cut rates to 4.5 percent in August.
The Halifax British house price index for October is due at 0800 GMT on Friday.
But market attention is focused on US October employment data, due at 1330 GMT and forecast to show non-farm payrolls rising 100,000, after falling 35,000 in September.
US Federal Reserve Chairman Alan Greenspan said on Thursday there was uncertainty surrounding the outlook for inflation, after the Fed raised rates by a quarter point to 4 percent this week.
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