Sterling fell sharply across the board on Monday, hitting a two-month low against the euro after a technical break on the euro/sterling pair triggered heavy sterling selling from model and hedge funds. Earlier in the session, traders noted aggressive buying in euro/sterling around 67.65-70 pence from these accounts.
Which helped fuel selling against other currencies. "This (sterling weakness) is down to technical drivers, several big sellers have been driving sterling down against the euro and dollar," Paul Robinson, chief sterling strategist at Barclay's Capital, said.
The euro was up 0.7 percent by 1400 GMT at 67.97 pence, having hit a two-month peak earlier at 68.10. Sterling was down 0.4 percent against the dollar at $2.0303.
The fall in sterling/dollar came despite lingering concerns over a credit crunch in the United States, which weighed broadly on the greenback. UK manufacturing data released earlier in the session was in line with expectations, signalling that a recovery in the sector was gaining traction.
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