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Euro close to 14-month Sterling high

Wednesday, January 30 12:58:10

The euro moved close to a 14-month high against Sterling today.

Traders said month-end demand to buy euros added to pressure on the pound, which failed to benefit from data showing a bigger-than-expected rise in UK mortgage approvals and lending.

The euro rose 0.5 percent on the day to hit 86.065 pence, surpassing a reported options barrier at 86.00 pence to hit its highest since early December 2011.

More gains were expected, with the next target at 86.20 pence, a peak hit on December 2, 2011. This level also roughly coincides with 1.16 euros per pound, a key level for UK companies looking to hedge foreign exchange exposure.

"There is still such power in these moves - in a strengthening euro with sterling one of the main losers - and people are really getting behind them," said Simon Smith, chief economist at FXPro.

"The fact that sterling isn't seeing anything in the way of a reversal indicates the lack of appetite to buy it."

Sterling has suffered since figures last week revealed the UK economy shrank more than expected in the fourth quarter, raising concerns about a possible credit ratings downgrade and the prospect of more monetary easing.

The pound's losses against the euro pushed its trade-weighted index down to 80.5, its weakest since late Feburary 2012.

Against the dollar the pound was up 0.1 percent at $1.5771, staying above the $1.5674 struck on Monday, its weakest since late August, and helped by solid gains in the euro against the U.S. currency.

However, it remained below chart support at $1.5855, the 200-week moving average. (C ) Reuters