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Forex traders got behind sterling following an early morning decline against the single currency after there was further speculation of eurozone interest rates increasing, Reuters reports.
But euro gains were capped because of a downgrade of Greek sovereign debt and the pound was helped by rumours the Bank of England might be set to up the interest rate around mid-year.
The single currency increased to 86.08 pence early on before it reduced to around 85.83 pence by 09:00 GMT.
John Hydeskov, sterling strategist at Danske, said: "Widening yield spreads could put more upward pressure on euro/sterling.
"Euro/sterling could rise a bit more if Trichet keeps up his hawkish stance on rates."
This comes after the single currency rose against the pound on Friday morning by 0.15 per cent to 85.93 pence.
Posted by Greg Secker
