Euro rally follows Greek deal

The pound, which neared 1.15 against the euro on Friday, was trading at 1.135 following the deal, which will see Greece able to borrow from eurozone countries at cheaper rates than money markets if it so decides.

The euro also hit a two-month high against the dollar, near 1.38 at one point as confidence in the single currency was lifted.

Fears about Greece's huge deficit have seen long-term lending rates for the country shoot above seven per cent in recent days as worries over a sovereign default loom.

The deal on the table thrashed out by finance ministers over the weekend would allow Greece to borrow at around five per cent, with another 10bn euro (8.8bn) available from the International Monetary Fund if needed.

Mark O'Sullivan, trading director at Currencies Direct, warned that the euro's bounce-back could be short-lived despite the deal. "Structurally nothing has changed in Europe because you have still got these highly-indebted southern countries," he said.