Euro reaches high against sterling before settling

EUR/GBP saw a drop of 0.09 per cent today to finish at 0.7851 after briefly hitting a high of 0.7872 on the back of positive rumours from Europe. A spokesperson for Germany’s finance minister suggested that the ECB was unlikely to target bond spreads, while a German magazine said it could set the interest rate for purchases of Eurozone sovereign debt at the next policy meeting next month.

Near-term support is expected to be at the 15 August low of 0.7823, while short-term resistance is likely to be at 0.7876, the high from last Friday’s trading day. The ECB would not comment on the reports that the next policy meeting would involve such discussions, but a move in that direction would kick-start the bond-buying process.

Investors are also likely to be looking out for a series of key meetings across the Eurozone this week. One such incident will happen on Wednesday when the Prime Minister of Luxemburg, Jean-Claude Juncker, will meet the Prime Minister of Greece, Antonis Samaras, to talk about the latter country’s economic reform programme.

The sterling also enjoyed support on Monday after a run of positive economic data coming out of the country last week. Minutes from the August meeting of the Bank of England suggest that interest rates were not on the agenda, while retail sales were up above expectations in July on a wave of spending before the Olympics.