Sterling was set for a record weekly gain against the euro and its biggest advance versus the dollar since 1985 as the Bank of England slowed the pace of interest rate cuts.
The pound rose today versus the euro and the dollar even as the UK Office for National Statistics said factories raised prices at the slowest annual pace in a year and manufacturing extended its worst slump in almost three decades.
A stronger sterling is seen as beneficial for Irish exporters as it makes the price of their goods and services more competitive.
The Irish Exporters' Association said yesterday the euro had depreciated 33 per cent against sterling over 2008 and that as a "direct consequence" the exports to the UK were down 6 per cent last year.
UK policy makers cut the benchmark interest rate yesterday by 50 basis points to 1.5 per cent, the smallest reduction of the past three, to ease the country's first recession in 17 years.
"The correction in euro-pound has clearly been the main story of the week," Steven Pearson, a foreign-exchange strategist at Merrill Lynch & Co. in London, wrote in a research note today.
"While initially understandable in the context of an overshoot relative to metrics like short-term rate spreads, we would now caution against looking for too much in the way of further downward progress."
The UK currency was at 89.41 pence per euro at 12.24pm in London, from 90.06 pence yesterday, bringing its appreciation this week to 7.1 per cent.
The pound also strengthened 5.3 per cent against the dollar this week to $1.5325, its largest advance since March 1985.
This week's gains followed a record 23 percent plunge against the euro last year, which brought the pound close to parity with the European currency.
Sterling weakened to an all-time low of 98.03 pence against the euro on December 30th.