Disappointing German Manufacturing print and comments from the ECB President, Mario Draghi, affected the demand for the Euro yesterday.
Sterling rose from 1.1845 to 1.1890 during the course of the days trading as the Euro was unable to attract investors during the morning session. In the afternoon, Draghi announced that he would be prepared to help boost liquidity and keep interest rates down by unleashing another batch of of long-term, low-interest loans. In 2011, Draghi created the LTRO (Long-Term Refinancing Operation) in order to ensure that banks had enough access to cheap funds in order to spur the growth of credit once again. Under the scheme, banks were given access to over € 1 trillion which resulted in excess liquidity up to € 800 billion at the start of 2012.
In a speach to the European Parliament yesterday Draghi said, “We are ready to use any instrument, including another LTRO if needed, to maintain the short-term money market rates at a level which is warranted by our assessment of inflation in the medium-term”.
GBPEUR hit an 8-month high of just over 1.1970 during trading last week and it is likely that the Pound will challenge a new multi-month high in the near future if ECB rhetoric remains dovish and UK data remains consistently good.
Filed under: http://www.theleader.info/article/40772/
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