Sterling hit a one-month high against the euro on Wednesday, coming close to its highest level since March after a German official dampened hopes that this week's EU summit would produce a comprehensive deal to tackle the eurozone crisis. The euro fell after a government official said Berlin was becoming more pessimistic about the chances of a significant agreement at the summit because some governments did not seem to have grasped the gravity of the situation.
The focus on the eurozone this week meant sterling largely shrugged off weak UK industrial production data, with traders also citing demand for the UK currency at the fix - the time when banks set a reference rate for the currency. The euro fell around 0.9 percent to hit a low of 85.10 pence, extending its slide after it fell below reported stop-loss orders at 85.40 pence. This left the single currency on course to target the November 10 low of 84.86 pence, below which would mark its lowest since March. It was last at 85.36 pence.
Against the dollar, the pound was up 0.6 percent at $1.5685. Technical analysts highlighted resistance at $1.5740, the 55-day moving average, ahead of the late November high at $1.5780. Moves in equities and riskier currencies were primarily being driven by swings in sentiment ahead of the EU summit, which begins with a working dinner on Thursday evening. Sterling has been supported versus the euro in recent weeks by investors.
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