Sterling drops versus dollar

Sterling fell against the dollar on Friday as a setback in Greece's efforts to secure a bailout pushed investors to the safety of the greenback, although it also helped the pound climb against the euro. With many investors looking to move out of the euro zone and into the safety of gilts, the pound was likely to post more gains against the euro, despite a fresh round of quantitative easing announced by the Bank of England this week, traders said.
The BoE pumped another 50 billion pounds into the economy to try and stimulate growth but sounded a bit more optimistic about an economic recovery. Still, many were wary of building bullish bets on the pound ahead of the BoE's inflation report next week. "We are sticking with the broader theme of some dollar recovery next week, although if euro zone concerns escalated and triggered increased sovereign debt inflows to the UK from Europe, sterling may hold up well," said Derek Halpenny, European Head of currency research at Bank of Tokyo Mitsubishi.
The central bank's inflation report will be released on Wednesday, a day after January inflation numbers. Sterling was last down 0.4 percent at $1.5752 against the dollar, retreating from a 12-week high of $1.5929 hit earlier in the week. Traders said a Swiss bank was selling sterling with decent bids seen at $1.5730.
The euro fell 0.4 percent to 83.70 pence, having earlier pushed above 84 pence to its highest level in two weeks. There was support at the 21-day moving average and Thursday's low around 83.40 pence, and chartists said a break below that level could signal a test of January lows around 82.20 pence. Fresh political wrangling in Greece injected more uncertainty on whether Athens will secure an international rescue package, vital for it to stave off bankruptcy and default.
The leader of a far-right party in Prime Minister Lucas Papademos' coalition government, George Karatzaferis, said he could not support a harsh austerity programme being demanded as a condition of Greece accessing the bailout package it needs to avoid going bankrupt.