GBP/EUR rates have spiked again during Wednesdays trading, with the pair hitting 1.41 at today’s high. The EUR has found some support around this level and despite the recent Sterling improvement, I do not expect this improvement to continue back up to the levels we saw in the summer.
The Pound has continued to benefit from a strong run of UK economic data but this is not the sole reason we have seen the Pound’s levels improve. In my opinion it is has far more to do with the on-going negativity surrounding the Eurozone, which in turn is hurting the EUR. The reason for today’s move can be attributed to European Central Bank (ECB) president Mario Draghi’s speech last night and the on-going concern that the ECB have over the current inflation levels inside the Eurozone.
Draghi eluded to the fact that they would use any and all measures available to them to help the Eurozone continue its recovery and if necessary would increase and/or extend their current Quantitative Easing (QE) programme. This uncertainty is causing the EUR to weaken and whilst this hangs over the markets heads I do feel the EUR will struggle to make a sustained move back under 1.40.
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