Forex: Euro gains against Sterling to reach new 5-month high

Important: This page is part of archived content and may be outdated.

Euro gained against the Sterling in this morning’s trading session hitting a new high since October 2010. EURGBP hit 0.8858. Since the European Central Bank rose interest rates on Friday by 25 basis points for the first time since July 2008 for a new rate at 1.25%. There are high expectations for yet another rate hike in the near future which gives a further boost to the Euro. Meanwhile, the Bank of England chose to keep their key interest rate unchanged at 0.5%, weakening the Pound.

The Single Currency has also gained against the US Dollar, reaching a new 15-month high on Friday 1.4486. It has since remained on high ground and is currently trading at 1.4458 intra-day level. The US Dollar has weakened as concerns of a government shutdown loomed last week. After Friday’s meeting, policymakers remain in a stalemate on due to disagreement on budget cuts. The Federal Reserve plans to purchase Treasuries until June in order to stimulate economic growth.

BNP Paribas Analyst Ray Attrill commented: “The underlying demand for the euro, because of the continued dislike for the dollar, is unrelenting. He added, “The risk is that we’ll see U.S. interest rates trending lower at the same time that we get more confidence about further rate hikes in the rest of the world.”