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According to Reuters, sterling also decreased by about half a cent versus the dollar due to the UK services sector showing a contraction in December that was not expected, marking the first drop in terms of output since April.
The euro increased from 84.43 pence to 84.65 pence after being down by 0.3 per cent against the pound earlier in the morning.
Sterling had experienced growth against the single currency due to strong US data and concerns regarding the eurozone.
And before the UK service sector results were announced at 09:30 GMT, Chris Turner, currency strategist at ING, said: "In light of stronger US data, short euro/sterling looks the better way to express a positive view on the pound."
He added the single currency looked to be the weakest link at the present time, stating his organisation has a target of 83 pence in mind.
Posted by Greg Secker
