Sterling eased against the dollar on Monday, as traders took profits after the UK currency scaled two-month highs last week and on nagging doubts about whether Britain's interest rates are headed higher in coming months.
The euro hit a three-week high against the pound as the single currency drew some support from easing eurozone debt worries and tough talk about keeping inflation in check from European Central Bank chief Jean-Claude Trichet. In contrast, Bank of England policymaker Adam Posen pointed to downside risks to prices on Friday, saying his view on underlying inflation was unchanged. The comments came after data showed retail sales fell 0.8 percent in December.
Sterling was down 0.2 percent at $1.5971, well below an eight-week high of $1.6060 hit on January 18 with stops cited at around $1.5940 and $1.5910. Chartists point to support at around $1.5830 - last week's low - with resistance seen at its November 16 high of $1.6095. The euro rose more than 0.4 percent to a high of 85.48 pence, breaking past resistance at its 100-day moving average of 85.367 pence to reach its highest since January 4.