However, it pulled off highs, tracking a move lower in the euro after Ireland's Prime Minister said Ireland would hold a referendum on Europe's new fiscal treaty. Sterling's moves were largely driven by events elsewhere, though sentiment was helped by a survey showing British retail sales improved more than expected in February, adding to signs of a tentative UK recovery. The pound was steady against the dollar at $1.5830, having risen as high as $1.5876, when it failed to test its 200-day moving average at $1.5903. Traders said this key technical level was acting as strong resistance, stopping it breaking above Monday's high of $1.5904 and the Feb. 8 peak of $1.5929, which would mark its highest since mid-November last year. "All attention is on the LTRO (ECB longer term refinancing operation) and as such sterling is not the catalyst for moves but rather being dragged around by other currencies," said Richard Wiltshire, chief FX Broker at ETX Capital. "This $1.5900/20 area is fast becoming a key level and could be pivotal in sterling's short term fortunes ... I would expect profit takers to emerge if we do see a rally to $1.60, which will provide further resistance." Sterling was well above last week's low of $1.5648, plumbed after the release of more dovish-than-expected BoE minutes which pointed to a risk that policymakers could opt for more quantitative easing to boost the economy later this year. The ECB's fresh injection of 3-year money on Wednesday is expected to bolster demand for the euro and other currencies perceived to be risky, including sterling, if there is a large take-up. But investors were mindful of risks ahead that could knock sentiment. The Irish announcement highlighted the hurdles facing euro zone leaders as they seek to reach a political consensus on any solution to the region's debt crisis. There were also concerns about whether Greece can implement the harsh austerity measures demanded of it in return for a bailout, while the possibility of the Bank of England opting for another round of monetary easing may limit gains for sterling. "There might be another attempt to break the top at $1.59 but I don't think that it will necessarily have much momentum above there," said Jeremy Stretch, currency strategist at CIBC. EURO NEAR 2-1/2-MONTH HIGH The euro was steady at 84.72 pence, above its 100-day moving average at 84.69 pence and not far from Friday's 2-1/2 month high of 85.06 pence. Last week's BoE minutes propelled the euro above its recent range that had seen it trapped below the 84 pence level. Citi strategists issued a sell recommendation on the euro against sterling, entering a short euro position at 84.73 pence and targeting a drop to 82.50 pence, with a stop loss at 85.55 pence. They argued markets had "gone too far in buying EURGBP last week" and that the sell-off in sterling following the BoE minutes provided an opportunity to buy. They also said many of the positives for the euro of the upcoming long-term refinancing operation (LTRO) were already in the price. Markets shrugged off ratings agency Standard & Poor's cutting of the long-term rating of Greece to 'selective default' after the country embarked on a bond swap with private sector creditors, a move which had been largely expected.