The euro fell to a fresh nine-month low against the British pound on Tuesday.
The single European currency is being sold off by investors disappointed by the outcome of last week’s EU summit.
Foreign currency traders said the euro looks vulnerable to more losses.
The pound meanwhile is likely to benefit from investors buying British government bonds.
Analysts explained that the pound’s strength against the euro was not due to UK economic fundamentals, but reflected the eurozone’s troubles.
The EU summit agreement last week fell short of any commitment to common euro bonds or measures that would see the European Central Bank step up purchases of bonds in the secondary market to relieve pressure on struggling euro zone sovereigns and boost market confidence.