Sterling rose against the euro on Friday as the single currency was hurt by concerns about problems on the periphery of the eurozone and the possibility of a debt restructuring in Greece. The euro's falls were limited, however, as it stayed supported by expectations the European Central Bank would keep raising interest rates while UK rates stay on hold. This kept the single currency comfortably above 88 pence and near this week's 5-1/2 month high of 89.24 pence.
The pound was weaker against the dollar and other major currencies, still suffering from recent weak data on UK economic activity and softer inflation figures on Tuesday, which dampened the chance of a near-term Bank of England rate hike. "Sterling is benefiting against the euro, supported by the focus on the euro zone sovereign crisis, but there is little conviction behind sterling flows on the crosses," said Lena Komileva, Global Head of G10 Currency Strategy at Brown Brothers Harriman.
The euro was down 0.2 percent at 88.42 pence, with Thursday's low of 88.08 pence seen as support, as well as the 21-day moving average at 87.95 pence. "The euro is in a typical consolidation phase within a bull trend and it may struggle near term, but the (upwards) trend remains in place," said Audrey Childe-Freeman, EMEA head of currency strategy at J.P. Morgan Private Bank.
A lack of UK economic data or events, and thin volumes as markets approach the Easter holidays, however, helped keep sterling in a range below its recent 15-month high of $1.6430 versus the dollar. The pound was down 0.2 percent at $1.6312. It was supported above this week's low at $1.6227 and the 55-day moving average at $1.6172. "The pound continues to be well bid on dips ... but continues to struggle anywhere near the $1.6400 level," said CMC Markets analyst Michael Hewson, adding it could struggle to break the 2010 highs at $1.6459.