Pound gains vs euro

LONDON (Reuters) - Sterling rose sharply against the euro on Wednesday ahead of the European Central Bank's rate-setting meeting and following an S&P ratings downgrade on Greece.

The ECB's governing council meets on Thursday and expectations it will cut interest rates by 50 basis points from 2.5 percent currently are weighing on the euro.

The euro also fell sharply against the pound and the dollar on news that Standard & Poor's cut its credit ratings on Greece's sovereign debt to 'A-/A-2' from 'A-A-1'.

"We are seeing broad-based euro weakness as we head towards the ECB meeting, not helped by the S&P downgrade on Greece," Bank of America G10 currency strategist David Powell said.

He added that on a quiet day for UK news, focus has turned to news elsewhere, dominated by the ECB meeting Thursday.

"With a number of central bank rate cuts recently, the currencies have fallen afterwards, even though the decision was broadly expected beforehand," he said.

At 3:24 p.m., the euro fell 0.9 percent against the pound to 90.17, having earlier traded as high as 91.28 pence.

The pound also gained against the dollar, rising 0.5 percent to $1.4573, helped by the announcement of a UK government package to support small businesses.

The government announced measures to provide 20 billion pounds in lending to small business and a 75 million pound enterprise fund to invest in firms needing equity.