The EUR has found some support during the early part of the trading week against Sterling but found itself on the back foot against the USD.
GBP/EUR rates dropped to 1.1341, with the single currency finding plenty of support around 1.14.
It was a different story against the greenback, with the EUR losing almost a cent at the day’s low. The loss against the USD could be attributed to the positive comments made by President Donald Trump at the Davos economic summit. The US stock market has hit multiple highs over the past year and with growth forecast looking healthy for 2018 and beyond, the outspoken President has wasted no time claiming responsibility for these positive strides.
With Trump first State of union speech tomorrow, its likely investors are flocking to the USD, predicting further positive comments to be made.
Looking at EUR/GBP and the European Central Bank (ECB) kept interest rates on hold and its monetary policy programme unchanged at last week’s central bank meeting. The EUR was well support following comments made by ECB President Mario Draghi, who remained bullish regarding the current Quantitative Easing (QE) programme and the positive effect it was having on the Eurozone economy. This helped to curb any further losses against GBP and help to support it around the current levels.
Reports circulated today that the EUR will demand freedom of movement for all EUR nationals for the entire Brexit transition period, with talks continuing between as we enter phase two of the negotiations. With trade talks due to start in march, it will be interesting to see how the single currency recast, with the Pound likely to come under further pressure in my opinion.
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