Sterling raced to a three and a half month high against the euro on Friday, as the single currency extended losses after the European Central Bank dumped its policy of rising interest rates and on reports a key ECB policymaker was quitting.
ECB Executive Board Member Juergen Stark will step down from his post because of a conflict over the central bank's controversial bond-buying programme, sources told Reuters. His departure will highlight how divided the ECB governing council is over the crucial question of providing support to troubled eurozone debtors. The euro fell to 86.22 pence, down 0.8 percent on the day, and its lowest level since May 27.
It fell past stops below 86.40 pence and has broken below its 200-day moving average which comes in at 86.939 pence, leaving it vulnerable to a test of the May 26 low of 86.11. The euro has not closed below its 200-day moving average since February. Against the dollar, sterling was down 0.4 percent at $1.5893, having fallen to a low of $1.5882, its weakest since July 12. Traders said losses accelerated after stop loss orders were triggered on the break below $1.5920.
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