Article by AlgosysFx Forex Trading Solutions
The Euro posted gains versus the Great British pound in the previous European trading exchanges, despite the release of the German Ifo Business Climate data which showed that confidence among German businesses declined for a four straight month in August as the European debt crisis suppressed Germany’s economic growth. UK financial markets were shut yesterday in observance of the Summer Bank Holiday. In today’s European exchanges, the single currency is expected to rise versus the Sterling on hopes that the European Central Bank (ECB) and the European officials are working toward effective measures to overcome the debt crisis.
Despite waning confidence among German businesses, the shared currency is expected to be buoyed by reports that Germany and France would create a working group to boost the Euro Zone, said German Finance Minister Wolfgang Schaeuble. Earlier this month, ECB President Mario Draghi expressed the possibility that the central bank would buy bonds to support troubled Euro Zone economies, even with the dissent of Germany’s Bundesbank. The ECB is anticipated to reveal further details of a possible program to curb rising Italian and Spanish bond yields probably after its meeting next week.
In the UK, its property market remains under pressure as the economy struggles to get out of a deep slump, and the European debt crisis weighs on the economy. Richard Donnell, Director of Research at Hometrack said that the market remains fragile and downward pressure on prices is likely to remain over the remainder of this year. With optimism over an ECB intervention in the markets, the shared currency is deemed to find support. As such, a long position for the EUR/GBP pair is recommended in today’s European exchanges.
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