POUND LIVE: Pound rises as euro hit by nerves ahead of European Central Bank update
THE pound clawed back some of its losses against the euro, as markets gear up for the latest update from the European Central Bank (ECB).
The pound lifted against the euro ahead of the ECB's latest update
Sterling edged up to around 1.1303 against the euro, after lower than expected UK inflation yesterday promped the pound to fall as low as 1.124 yesterday.
Markets are now eagerly awaiting to hear from ECB president Mario Draghi, who is set to signal the course of monetary policy in the eurozone over the coming months.
Expectations the central bank could scale back support for the economy have been growing in recent weeks, helping to strengthen the euro.
If the chief provides hints about either raising interest rates or reducing te size of the eurozone money-printing programme, the bloc's currency could rise further.
The pound edged up against the euro on Wednesday morning
Michael Hewson, chief market analyst at CMC Markets UK, said: "While the economic outlook has improved in Europe markets are now betting it is only a matter of when the ECB starts preparing the ground for a slow retreat from its stimulus program."
The euro has strengthened dramatically against the dollar in recent months, now sitting at around 1.1523 - and Mr Draghi could push the eurozone currency higher.
Mr Hewson added: "A move to the 1.2000 level is a distinct possibility on a break of 1.1620 and last year’s high."
It comes as the dollar has weakend with doubts over Donald Trump's agenda after the president's failed healthcare bill.
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Despite yesterday's hit to the pound, experts say sterling could rise against the dollar in the near future.
The price action on the GBP/USD looks bullish thanks mainly to ongoing weakness in US dollar.
Fawad Razaqzada, market analyst at Forex.com said: "The cable took its sweet time but last week finally cleared a major hurdle when it closed above the 1.3000-1.3050 resistance area where it had struggled in the past.
"Now above this area, the path of least resistance is to the upside and will remain that way until such a time we see a distinct reversal pattern unfold."
More to follow...