Events in the Eurozone proved to be something of a damp squib this week, failing to affect the performance of the single currency as it continues to trade in a fairly narrow range against sterling. Movements in major rates were largely dictated by events elsewhere. Sterling strengthened against the euro early in the week following better-than-expected Manufacturing data, whilst the euro gained against the US dollar mid-week following the release of Meeting Minutes from the US Federal Open Market Committee (FOMC). Whilst market chatter remained active and speculation abounds regarding whether the European Central Bank (ECB) will cut interest rates further or start a programme of quantitative easing, the single currency itself remained remarkably stable.
The Belgian Finance Minister’s mid-week sentiments were notable as he expressed concerns that the euro is currently overvalued. If such sentiments become more widespread, we would expect to see the single currency adopt a more negative trajectory and weaken. Today also holds little in the way of potentially influential events and data. However, as always, events elsewhere have the potential to alter euro rates.
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