LONDON: Sterling rose from a one-week low against the euro on Friday, with a boost from the latest policy easing measures from the European Central Bank overriding concerns about whether Britain will leave the European Union.
The euro fell 0.7 percent to 77.75 pence, having hit a one-week high of 78.47 on Thursday after ECB President Mario Draghi said he expected the bank might not have to cut interest rates further. Draghi's comments offset news of interest rate cuts and further asset purchases, both of which were more than markets expected.
The euro had hit a one-month low of 76.53 pence after those measures were announced, but bounced back and was on track for weekly gains.
"In the short term, we expect the euro to gain against the pound, not just because of what Draghi said, but because we think that the Bank of England will turn dovish next week," Western Union market analyst, Nawaz Ali, said.
The BoE's monetary policy committee meets next week and the minutes of the meeting will be released on March 17.
This week, Governor Mark Carney very cautiously pointed to what he saw as the economic risks of Britain leaving the EU.
Against the dollar, sterling was flat at $1.4290. While the currency has bounced from 7-year lows of $1.3876, hit in late February, it has failed to rise past $1.43 with investors cautious about buying it in a big way given worries about "Brexit".
British voters will decide in a referendum on June 23 whether the country stays in the EU or leaves. The latest YouGov polls show those wanting to stay in the EU are gaining ground, while bookmakers see a one-in-three chance of Britain exiting.
Investors worry that Brexit could drag down growth, push back UK rate hike expectations and also threaten the huge foreign investment flows Britain needs to balance its current account deficit, one of the biggest in the developed world at about 4 percent of output.
There was little reaction to data that showed Britain's total trade deficit narrow to 3.459 billion pounds in January from a revised 3.699 billion in December.
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