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This is intended as a brief guide to the latest movements in the exchange rates, to help you decide the best time for you to change currencies.
The pound has crept up against the euro and Australian dollar overnight, as the foreign exchange market questions whether European Central Bank hints it can “save the euro” are accurate.
Last week, president of the ECB Mario Draghi said he would do “whatever it takes” to preserve the common currency, promising his actions “would be enough.” On the back of that, the euro flew up across the board ahead of this Thursday’s meeting of the central bank, ahead of which markets wait with baited breath to see what Draghi does.
Yet, as time goes on, investors increasingly doubt he’ll pull out the big bazooka he promised last Friday. Credit rating agency Moody’s for instance called his promise, “another sticky wicket in order to buy more time.” Elsewhere, an Italian debt auction, intended to sell €2.5bn in government bonds, sold just €2.485bn, as markets continue to shy away from peripheral debt.
It all points to a foreign exchange market that, though hopeful Draghi saves the day, doubts that he will. As Kosuke Hanao, head of FX at HSBC, notes: “Mr. Draghi set himself a high hurdle. If he fails, we may see a market crash as expectations are so high.” In other words, if the ECB disappoints, the pound could yet climb further against the euro and Aussie dollar later this week.
The central bank holds its meeting this Thursday.
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