Sterling jumped to an eight-month high against the dollar on Thursday as hefty selling pressure on the greenback was exacerbated by Singapore widening the trading band of the Singapore dollar. But the UK currency gave up some of those gains as it ran into selling by over-extended investors, including some real money accounts, traders said.
The pound also stayed close to a six-month low against the euro as concerns that the Bank of England could ease monetary policy further kept sterling vulnerable against currencies other than the dollar. The US unit has fallen sharply recently on the view that the Federal Reserve may be set to adopt a fresh bout of quantitative easing to boost a flagging US economy.
The Singapore move was seen as an excuse for more dollar selling as more Fed easing would probably weaken the US currency further versus Asian currencies. By 1500 GMT, sterling was up at $1.6012, having risen more than 1 percent to a high of $1.6067, its strongest since early February. The euro rose 0.14 percent against the pound to 87.92 pence.