Article by AlgosysFx Forex Trading Solutions
The Euro lost against the British pound in the previous European trading session as the markets look to the Jackson Hole Symposium this week, where Federal Reserve Chairman Ben Bernanke is set to speak and possibly drop clues regarding the possibility of additional monetary easing by the US central bank. Also, the clash between German Chancellor Angela Merkel and Italian Prime Minister Mario Monti regarding the region’s debt crisis plan contributed to the decline of the single currency.
In today’s European trading exchanges, the shared currency is expected to go down versus the Sterling on renewed pessimism over the European officials’ efforts to stem the debt crisis. Yesterday, the two leaders took their disagreement in public with regard to getting a license for the Euro Zone’s bailout fund to increase its bond-buying capacity. This clash adds to the existing divide between the European Central Bank’s Mario Draghi and the German central bank. The ECB expressed its willingness to help troubled Euro Zone economies as long as it seeks help from the region’s bailout fund first. But such possibility was criticized by Bundesbank President Jens Weidmann as it would increase governments’ dependence on the ECB. In response, Draghi said that the ECB will always act within the limits of its mandate, but it would sometimes require going beyond standard monetary policy tools.
In the UK, the number of households without work was reported to have declined for a second straight year, said the Office for National Statistics, showing that reforms are gradually taking effect. Taking into consideration all these factors, a sell bias for the EUR/GBP pair is recommended in today’s European trades.
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