The euro and the pound made tentative moves higher in morning dealings on Thursday as currency traders shifted their focus to the European Central Bank meeting.
The pound was 0.25 per cent firmer at $1.2912 after touching a seven-week low of $1.2865 on Wednesday. The euro climbed 0.14 per cent on Wednesday’s close at $1.1407, reaching a two-month low of $1.377. Both currencies fell 0.7 per cent against the dollar on Wednesday.
Citing disappointing manufacturing PMI data, trade tensions and the budget stand-off between Italy and the EU, Antje Praefcke, analyst at Commerzbank, said “the euro is increasingly running out of reasons for why it should keep up with the dollar.”
It is unlikely that today’s ECB meeting will give the euro a boost, said Ms Praefcke. “If the FX market should be hoping that today’s ECB meeting will reveal when exactly the ECB is thinking to hike its key rate it will be disappointed again. ECB President Mario Draghi is going to provide little information on that,” she said.
Indeed Ms Praefcke believes the likelihood of the ECB remaining expansionary for longer has increased – something that is bearish for the currency.
The dollar remained flat in early trading in London, with the dollar index — which measures the buck against a basket of six global peers — fairly in line with yesterday’s close.
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