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EUR/GBP extends losses on expectations for ECB rate move

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Investing.com -

Investing.com - The euro fell against the pound on Friday as investors continued to avoid the single currency on expectations for the European Central Bank to loosen policy in June.

In U.S. trading, EUR/GBP was down 0.08% at 0.8168, up from a session low of 0.8163 and off a high of 0.8183.

The pair was likely to find support at 0.8158, the low from Feb. 17, and resistance at 0.8248, Thursday's high.

The European Central Bank this week left interest rates unchanged at 0.25%, though the euro dropped after ECB President Mario Draghi said the bank's governing council is comfortable with acting at its next meeting after the bank publishes fresh inflation and growth forecasts.

Draghi attributed weak inflation rates to food and energy prices, but added that the strong euro and weak domestic demand are also pushing down inflation.

He reiterated that the ECB does not have a target for the euro exchange rate but stressed that the bank would closely monitor exchange-rate developments.

Market talk that fresh easing measures or rate cuts softened the euro.

The bank will meet on June 5 to discuss monetary policy.

Elsewhere on Friday, official data revealed that Germany's trade surplus narrowed to €14.8 billion in March from €15.8 billion in February, whose figure was revised from a previously estimated surplus of €15.7 billion. Analysts had expected the trade surplus to widen to €16.6 billion in March.

In the U.K., official data revealed that U.K. manufacturing production rose 0.5% in March, beating expectations for a 0.3% gain, after a 1.0% increase the previous month.

A separate report showed that the U.K trade deficit narrowed to £8.48 billion in March, from £8.75 billion in February, whose figure was revised from a previously estimated deficit of £9.09 billion. Analysts had expected the trade deficit to widen to £9.00 billion in March.

Geopolitical concerns overshadowed the data, however.

Pro-Russia separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule and said they plan to go ahead on Sunday with a vote that some fear could lead to a civil war.

European Commission President Jose Manuel Barroso said earlier that the European Union was still struggling to agree on what approach to take on the crisis and added the event was the biggest threat to European security since the fall of the Berlin Wall.

The euro was down against the dollar, with EUR/USD down 0.56% to 1.3762, and down against the yen, with EUR/JPY down 0.47% at 140.03.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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