Pound Ends Run of Gains against Euro as Investors Remain Wary

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Pound Ends Run of Gains against Euro as Investors Remain WaryThe pound ended its eight-day winning streak against the euro after traders adopted a cautious stance ahead of the European Central Bank’s meeting scheduled on Jan. 22. The investors were also smarting from their losses after the currency cap on Swiss franc was abolished.

The sterling fell 0.5 percent to trade at 76.75 pence per euro as of 4:28 p.m. in London, the steepest drop since Jan. 2. It touched 75.96 pence per euro on Jan. 16, its highest level since Feb. 2008. The pound remained slightly unchanged at $1.5153. The ECB is due to debate on various issues, among them whether to roll out quantitative easing program, which involves purchasing government bonds.

“Short-term, there has been some profit-taking on the euro,” Harry Adams, a London-based head of trading at Argentex LLP, told Bloomberg News. “A lot of people are covering in the lead-up to Thursday just in case nothing is announced or if something is announced and it disappoints, then the euro will take a bit of a lift. It has been a bad week for FX traders as a whole so a lot of people are scaling back their risk.”

The Swiss National Bank abolished the 1.20 euro ceiling imposed on the franc that had been in place over the last three years, roiling financial markets. The franc jumped 41 percent against the euro the same day, the most on record.

The yields on the target 10-year gilts plunged by nearly one basis point to close at 1.53 percent, while that of the 30-year gilts declined 0.03 percentage point, to three basis points to 2.20 percent, up from a record-low of 2.181 percent touched on Jan. 16. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com