(Reuters) - The euro hit its lowest level in 3-1/2 years against sterling on Friday, with traders citing a German report that quoted a member of a party in the coalition government saying a country should leave the euro zone if it cannot implement agreed reforms.
The euro fell 0.25 percent on the day to 77.895 pence, its weakest level since October 2008.
Asked if Greece could stay in the euro, Gerda Hasselfeldt, a senior member of the Bavarian Christian Social Union (CSU), sister party to Chancellor Angela Merkel's Christian Democratic Union (CDU) said it was up to Greece to implement measures that had been agreed.
"If a country is unwilling or unable to comply with its obligations, it must leave the euro zone," she added in an interview to the Rheinische Post.
The report intensified euro selling, with worries about debt problems in Spain encouraging investors to switch out of euro zone assets into ones perceived to be safer, including UK assets. (Reporting by Jessica Mortimer, editing by Nia Williams)
