Sterling pairs broad gains

Sterling clawed back from an eight-week low against the euro on Wednesday, as the single currency pared broad gains after the Greek parliament passed a set of strict austerity measures as widely expected. The pound retreated from a session high versus the dollar after a poll showing higher UK inflation risks ultimately did little to change the markets' view that interest rates will stay on hold until well into 2012.
In late London trade, the euro had slipped 0.1 percent to 89.70 pence, near a session low of 89.67 pence. Earlier in the day, demand from a eurozone sovereign name had boosted the single currency to as high as 90.15 pence, its strongest since early May and piercing through the psychologically key 90 pence level. The climb in euro/sterling helped to knock the pound to a 13-month trough versus a currency basket of 77.9.
A rise above 90.43 pence, hit in May, would take the euro to its highest since March 2010, but many in the market expected a sustained rise above 90 pence was unlikely, given its inability to sustain gains above that level in the past. Sterling was little changed at $1.6010, having retreated from a session high of $1.6059 as the pound trimmed gains in sympathy with euro losses against the dollar. An initial rise after a survey showed a 3.9 percent year-on-year rise in inflation expectations for the next 12 months from June - up from 3.4 percent in May.