The euro fell back against sterling from yesterday's levels of over 94 pence to trade at just over 93 pence this lunchtime.
Sterling strengthened against the euro and the dollar after data showed a smaller-than-expected rise in the number of UK jobless, and the unemployment rate staying unchanged at 7.9 per cent.
Average earnings figures were also stronger than expected, all of which prompted currency traders to further pare back some of the heavy bets built up against sterling in recent weeks.
Sterling rose around 50 ticks against the dollar to $1.5990, within sight of the session high struck earlier at $1.5994.
The euro fell around 30 to a session low of 93.04 pence. Official statistics showed that the unemployment rate held steady at 7.9 per cent in August, instead of rising to 8 per cent, as economists had expected.
The number of Britons claiming jobless benefit rose by 20,800 in September, less than expected and the smallest rise since May 2008.
December gilt futures held steady at 119.92, while Britain's FTSE 100 was little affected by the data, up 1.3 per cent at 5,219.29.
The euro hit a 14 month high against the US dollar today, boosted by the acceleration in euro zone industrial output, while the dollar came under additional, broad selling pressure.
The euro reached $1.4913 in London, its highest level since August 2008, before falling slightly to just under $1.49 before lunchtime.