Sterling rose against the euro on Thursday, helped by eurozone debt concerns in the run-up to struggling Spain's budget and by M&A news as France's GDF Suez offered 6 billion pounds for the rest of International Power. The pound also rose versus the dollar though gains were limited after a fresh batch of soft UK economic data and it stayed well below a 4-1/2 month high hit earlier this week.
Data on Thursday showed UK mortgage approvals falling unexpectedly, as well as a record monthly fall in money supply. Mortgage lender Nation-wide said house prices suffered their sharpest monthly fall in more than two years in March. On Wednesday data showed the UK economy contracted more than previously thought in the fourth quarter of 2011, serving as a reminder that the UK economy is struggling to stage a sustainable recovery.
"There has been a lot of focus on the more negative GDP print. There has been evidence that things have been a little stronger in the first quarter but there is still a little nervousness," said Gavin Friend, currency strategist at nabCapital. The euro eased 0.5 percent to 83.37 pence, retreating from a two-week high of 83.95 pence struck on Wednesday. Sterling was up 0.15 percent against the dollar at $1.5910, pulling away from a low of $1.5842 hit the previous day after the gross domestic product data. However, it was still well away from highs hit on Tuesday when it touched a 4-1/2 month high of $1.6002. Still, the euro stayed within its recent tight trading range, above the March 19 low of 82.83 pence and below the March 13 high of 84.24 pence.
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