Sterling rose to its highest in nearly 16 months versus the euro on Thursday on worries over euro zone sovereign funding pressures and after data showed a pick-up in UK service sector activity. But the UK economy's uncertain prospects dragged the pound down against a broadly firmer dollar, which was boosted by strong US jobs data.
The euro fell to 82.50 pence, its lowest since mid-September 2010 to trade down around 0.3 percent for the day, extending losses after breaking below its 2011 low of 82.85 on Wednesday. It was last at 82.63 pence. The single currency fell broadly, hitting multi-month lows versus the dollar and a decade low versus the yen on nagging concerns over the ability of highly indebted countries within the eurozone bloc to raise funds.
Analysts expect further gains for sterling against the euro, as the region's debt crisis rumbles on. Technical analysts at Commerzbank said the outlook for euro/sterling remained bearish, highlighting the 2010 low at 80.67 as its next major target with long-term support at 77.85, the 61.8 percent retracement of the euro's 2007-2009 rally. Sterling fell nearly 1 percent on the day against the dollar as eurozone worries dented investors' appetite for risk and boosted demand for the safe-haven US currency. Sterling fell as low as $1.5466, extending falls after stop-losses were hit on the break below Wednesday's low of $1.5580 and leaving it in sight of $1.5361, a low hit on December 29. It was well below the December 21 high of $1.5775.
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