LONDON: Sterling won some respite on Friday as global stocks rose, but persistent worries about a possible British exit from the European Union checked gains to leave the currency on track for its biggest weekly loss since 2010.
Sterling rose 0.5 percent to $1.4035, pulling away from a seven-year low of $1.3878 plumbed on Wednesday but on course for a 2.7 percent weekly fall.
The euro was down 0.6 percent at 78.45, having hit a 14-month high of 79.28 pence on Thursday.
The single currency came under pressure as rising stock markets made investors less inclined to pile into safe-haven and low-yielding currencies, including the yen and the euro.
British voters will decided on June 23 whether to stay in the EU or quit, and sterling has been hit by worries that a "Brexit" would threaten the huge foreign investment flows the country needs to balance its current account deficit - one of the biggest in the developed world at some 5 percent of economic output.
Selling accelerated this week as companies and investors rushed to protect themselves against that risk.
Some sellers are targeting $1.35 and below, levels last seen when the pound sank towards parity with the dollar in the mid-1980s.
The drop has been so dramatic that it prompted a rare comment on economic matters from Foreign Secretary Philip Hammond, a pro-European, who said it offered a "foretaste" of the impact leaving the EU.
Finance Minister George Osborne also waded in, saying that the currency's decline was a reminder that the outcome of the referendum would have economic consequences. "Investors continue to favour selling sterling rallies," said Josh O'Byrne, currency strategist at Citi.
"Though the scale of the move looks exaggerated, there seems no obvious trigger for recovery."
The pound has also been undermined by expectations that an exit would push back the horizon for a Bank of England interest rate rise. HSBC, Britain's biggest bank, said the currency could lose up to 20 percent of its value and growth could be up to 1.5 percentage points lower next year if Britain voted to leave.
Most polls have shown the 'In' camp with the upper hand, but the lead is being chipped away by the "Out" camp.
Bookmakers see around a one-in-three chance of an exit. "The next round of opinion polls regarding the UK referendum is likely to set the pace for next week's trading," Rabobank said in a note.
"That said, while sterling is clearly still very vulnerable, a more pragmatic tone already appears to be tentatively emerging in response to the combined signals from opinion polls and bookies."
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