Sterling extended gains against the euro on Friday, helped by fund selling of the single currency due to a renewed rise in concern over eurozone sovereign debt risks. It also recovered ground against the dollar after US non-farm payrolls disappointed on bullish market expectations, but traders said the knee-jerk reaction to the data had not changed the broader trend.
Yield spreads between Portuguese, Spanish and Italian 10-year government bonds and their benchmark German counterparts widened on Friday as markets looked nervously to next week's heavy debt supply. The euro fell 0.6 percent to 83.54 pence, closing in on a one-month low around 83.50 pence. Traders said the technical outlook remained negative after this week's break and close below the 200-day moving average, seen as resistance at 84.81 pence on Friday. Sterling rose 0.4 percent to $1.5535 driven by fund demand.