LONDON: Sterling pared deep weekly losses on Friday thanks to an afternoon rebound as sentiment improved across global financial markets, lifting risk currencies and encouraging investors to pull out from the dollar safe haven.

The pound reached its lowest levels of the year earlier this week, weakened by Britain's shortage of truck drivers and a surge in energy prices while a hawkish-sounding Federal Reserve and worries about Chinese growth boosted the greenback.

"It was kind of a perfect storm for sterling," said Kit Juckes, chief foreign exchange strategist at Societe Generale, adding that the move was being "partially reversed" this Friday.

While markets have brought forward their expectations for the Bank of England to raise interest rates, the likely incoming tightening of monetary policy has failed to prop up the currency.

"It's been another grim week for the pound, which remained highly sensitive to swings in sentiment and still struggled to cash in on the recent hawkish repricing of Bank of England rate expectations," said Francesco Pesole, a strategist at ING.

At 1430 GMT, the pound was up 0.5% at 85.50 pence against the euro and rising 0.63% versus the dollar at $1.3562 .