Sterling hit a near two-month high against a broadly struggling euro on Wednesday due to uncertainty about how the euro zone will deal with debt problems facing weaker periphery members. The euro fell as low as 84.28 pence, its weakest since late September, before trimming losses. Some traders cited demand for euros from a UK bank as helping to lift it from session lows.
Ratings agency S&P on Wednesday said Ireland's growth expectations were too optimistic, a day after it cut its sovereign rating. Dublin on Wednesday unveiled a strict, four-year austerity plan after securing a debt bailout from the EU and the IMF this week but this did little to allay concerns that other periphery eurozone countries may also be in trouble.
By 1625 GMT, sterling was flat at $1.5775, after falling to $1.5742, its lowest since late October, as problems in the euro zone prompted some flows into the safe-haven dollar. The euro traded at 84.77 pence in late London trade. Corporate demand was seen around 84.30 pence, traders said.