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EUR/GBP drops as Draghi drops hints atnew stimulus measures

Published 05/08/2014, 11:47 AM
Updated 05/08/2014, 11:49 AM

Investing.com - The euro fell against the pound on Thursday after European Central Bank President Mario Draghi suggested earlier that monetary authorities may unveil fresh easing measures at the bank's next policy meeting in June.

In U.S. trading, EUR/GBP was down 0.30% at 0.8180, up from a session low of 0.8169 and off a high of 0.8248.

The pair was likely to find support at 0.8169, the earlier low, and resistance at 0.8259, the high from April 29.

The European Central Bank earlier left interest rates unchanged at 0.25%, though the euro dropped after Draghi said the ECB governing council is comfortable with acting at its next meeting in June.

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 numbers.

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.

Draghi reiterated the bank’s forward guidance, saying that interest rates will remain at their present, or lower, levels for a considerable time.

The ECB chief said the latest data shows that the European economy is recovering, in line with the bank's forecasts, but also pointed to a prolonged period of low inflation, followed by only a gradual rise in prices.

Elsewhere on Thursday, the Bank of England's Monetary Policy Committee voted to keep interest rates on hold at their current record low of 0.5%. The bank also made no change in its quantitative easing program, which remains at £375 billion, though the pair largely ignored the widely-anticipated move.

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The euro was down against the dollar, with EUR/USD down 0.33% to 1.3864, and down against the yen, with EUR/JPY down 0.53% at 140.96.

In the U.S. earlier, the Department of Labor reported that number of individuals filing for unemployment assistance last week fell by 26,000 to 319,000 from the previous week’s revised total of 345,000.

Analysts had expected jobless claims to fall by 20,000 to 325,000.

On Friday, the U.K. is to publish data on manufacturing and industrial production, as well as data on the trade balance.

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