Yesterday saw increased movement in euro, strengthening against both sterling and the US dollar, reaching its highest point in 2014 against sterling and hitting fresh 2 year highs against the US dollar. The holding of interest rates at 0.25% by the European Central Bank (ECB) and the cautiously optimistic forecast for increasing rates of inflation have both contributed to increased confidence in the single currency.
The ECB Monthly Bulletin is due out today and will reveal the data that was considered when the decision was made to hold interest rates. More positive figures are likely to cause the recent euro surge to continue. Less convincing data, however, may cause some investors to question the validity of the inflation forecasts as well as the decision not to cut interest rates, thereby having a negative effect in the eighteen-nation currency.
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