Sterling steadied on Friday, having touched a twomonth low against the dollar in early London trading, and was set for its biggest weekly drop against the euro so far this year, hurt by profittaking after a strong first quarter.

The pound had its best quarter against the euro since 2015 in the first three months of 2021, boosted by the UKs vaccine rollout, which is one of the fastest in the world, as well as a fading of negative interest rate expectations.

Analysts also attributed its strengthening against the euro to an expectation that economic recovery in the UK would outpace that in the euro zone.

But that trend reversed this week, with sterling falling against the euro on Tuesday, Wednesday and Thursday a move which market participants said was amplified by a squeeze of europound short positions.

At 1207 GMT, the pound was at 86.615 pence per euro, up around 0.2 on the day. It remained on track for its biggest weekly fall since September 2020, down 1.9.

Versus the dollar, the pound was down 0.1 at 1.3723, and also on track for a weekly loss.

Britain has surged ahead of the rest of Europe in the race to vaccinate its population, with almost half of its citizens receiving a first dose.

But supply issues from surrounding its main OxfordAstraZeneca shot have slowed progress in recent days, while Germanys inoculation campaign has sped up.

The selling of sterling may have been connected to buying of euros, Marshall Gittler, head of investment research at BDSwiss,…