Sterling took a breather on Friday, retreating from a five-week high against the dollar, but was on track for its best weekly performance since late May as investors cheered a eurozone deal on Greece.
It ran into steady profit-taking at higher levels and was last trading flat against the dollar at $1.6312, off a five-week high of $1.6344 struck on Thursday. It gained nearly 1 percent this week.
Traders cited decent bids at $1.6260 with intra-day stops below $1.6250. Technical analysts highlighted support at the 100-day moving average around $1.6242 and the 55-day moving average around $1.6206. "Sterling is well bid at the moment and it looks like it wants to keep going," a trader said.
Strategists said between the US dollar, the euro and sterling, short-term investors were bidding the pound as the UK economy had a credible fiscal plan in place.
On the other hand, political wrangling over whether to raise the US debt ceiling by the August 2 deadline to avoid a debt default and possible credit rating downgrade weighed on the greenback while the euro was still digesting a second rescue package for Greece.
The euro was last down 0.4 percent at 88.03 pence. Traders cited short-term resistance at 88.50 pence, while downside support came in around the 21-week moving average at 88.00 and 87.03 pence, the 100-week moving average.
Weak UK economic data has undermined sterling's chances of gaining against the euro on concerns over the eurozone debt crisis, as eurozone interest rates are on the rise while UK rates are set to stay on hold. The next key event for sterling is the release of second-quarter GDP data on Tuesday.
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