Sterling rises versus euro

Sterling rose to a two-week high against the euro on Friday as investors trimmed bets on further quantitative easing in the UK, although it ran into some profit-taking against the US dollar, which will keep it from testing recent peaks.
The euro drifted lower, retreating from a three-month high against the dollar, after the European Central Bank pumped more cash into the banking system and as lingering concerns about the euro zone and worries regarding Greek austerity and restructuring programme remained.
And while these have led to the underperformance of the euro, slightly better UK data in recent weeks has supported the pound. On Friday, construction sector PMI survey handily beat expectations, lending support to the pound. The improvement in data has led investors to pare back expectations that the Bank of England will pump more money into the economy to stimulate growth.
Earlier this week, BoE governor Mervyn King was seen to have nudged the bar for more QE higher when he told lawmakers the bank will be guided by upcoming data when deciding whether to print more money. The euro was down 0.3 percent at 83.21 pence, having fallen to 83.135, its lowest in two weeks. It looked set for more losses after it fell below support around 83.30 pence which is the 61.8 percent retracement of the euro's rise from its January low of 82.22 pence to its recent two-month high of 85.06 pence. Its next target could be its February 17 low of 82.88.
Against the dollar, sterling was down 0.5 percent at $1.5867, with option barriers at $1.60 looking safe, for now. It triggered stop-losses after it fell past its 200-day moving average of $1.5896. "The dollar has been a standout performer today, and while the PMI reading stemmed sterling's fall, flows are light and it does not look that $1.60 will be tested today," said a London-based spot trader. Cable hit a three-and-a-half month high of $1.5993 earlier this week and has risen for three straight sessions until Friday, leaving it ripe for a correction.