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Title: Sterling hovered close to 2011 lows versus the euro on Friday and was poised for further losses on concerns over UK economic growth and uncertainty over the timing of a Bank of England rate hike.
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Sterling hovered close to 2011 lows versus the euro on Friday and was poised for further losses on concerns over UK economic growth and unce...

Sterling hovered close to 2011 lows versus the euro on Friday and was poised for further losses on concerns over UK economic growth and uncertainty over the timing of a Bank of England rate hike.

The single European currency narrowly extended its 1 percent rise on Thursday when weaker-than-expected UK consumer spending data raised concerns over growth which could further push back the timing of an interest rate rise from the Bank of England.

"The pound is under pressure. Weak retail figures, a somewhat dovish tone from the MPC minutes on Wednesday as well as George Osborne cutting the UK growth outlook and rate hike expectations being pushed back, are putting sterling on the backfoot," said Geraldine Concagh, economist at AIB Treasury Group.

UK finance minister George Osborne downgraded the government's projections for UK growth to 1.7 percent for this year in his budget statement on Wednesday, while Thursday's weaker retail sales data was a reminder that the UK consumer is being hit by a fiscal squeeze and rising inflation.

Money markets are now pricing in the first rate hike in the UK for August. On Tuesday, after inflation jumped to its highest in two-and-a-half years, they had expected the first hike in July.

"Trichet and others have made it clear that they will hike rates as intended despite news events around the world. The discrepancy between the BoE and ECB is pulling euro/sterling higher. There is a good possibility that the pair can go as high as 90 pence," said Beat Siegenthaler, currency strategist at UBS.

The euro was helped on Friday after German business sentiment fell less than expected in February, though concerns over the Portuguese economy undermined the currency.

The single currency rose to 88.12 pence, its highest since November 4. It later eased to 87.85, close to unchanged on the day.

Technical analysts said the outlook for the euro remained positive after a break above key trendline resistance at 87.60, drawn from the all-time highs around 98.05. Analysts at CMC markets said a close above the trendline would open the way for further euro gains.

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