Sterling pares gains versus dollar

Sterling pared gains versus the dollar on Thursday in a move driven largely by a sharp drop in the euro after European Central Bank President Jean-Claude Trichet dampened expectations for a rate hike in the eurozone.
Trichet's comments, which came after the ECB's decision to keep interest rates at a record low 1 percent as expected, disappointed investors who had expected a more hawkish statement after recent inflation data came in above forecast.
The pound had risen to a three-month high versus the dollar in morning trade after UK services PMI data came in above expectations, bolstering the case for higher interest rates in the UK. The euro traded down around one percent at a two-week low of 84.39 pence, falling below its 200-day moving average around 84.56. Sterling traded down around 0.3 percent at $1.6140 in afternoon dealing after rising as high as $1.6279 on the UK PMI data.