STERLING has hit a one-month high against the euro, helped by more hawkish signals recently about benchmark UK interest rates.
The euro has also been weighed down by continuing worries over the possibility of Greece falling out of the single currency zone. Quantitative easing by the European Central Bank has also weighed on the single currency in recent times.
The single currency dropped to around 70.7p during yesterday's session, as the pound notched up its third consecutive week of gains against the single currency.
At 5pm, the euro was trading around 70.84p, down 0.35p on the day.
The pound also rose slightly against the dollar. Sterling was trading around $1.5737 at 5pm, up slightly from its close in London on Thursday.
Martin Weale, regarded as one of the hawks on the Bank of England Monetary Policy Committee, signalled this week that he might soon start voting again for a rate rise.
Mr Weale has in the recent past voted unsuccessfully for an increase in rates. He abandoned his rate rise push in January.
Most economists have been predicting that the first increase in UK base rates from their record low of 0.5 per cent is unlikely to come until next year.
However, financial markets have now moved to price in the chance of a rise in base rates in December.
Minutes of the MPC's June 3 and 4 meeting, published last week, signalled that members of the nine-strong committee are now more firmly of the opinion that the next move in base rates will be up, rather than down.
Sterling's sharp rise against the euro presents a further challenge for the UK's struggling manufacturing industry, making firms in this sector less competitive in market-places in the single currency zone.
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