The Euro turned losses into gains in the previous European trading session on news that Spain could be moving closer to a bailout, after a top European Union official endorsed the country's austerity measures to reduce its budget deficits this year and the next. The single currency likewise found support from news that Greece could receive aid at around 44 Billion Euros. The Sterling on the other hand declined on returning speculations that the UK central bank would further expand monetary stimulus to shore up the economy.
Worries over Spain eased yesterday after EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters that "Progress is being made even if the situation faced by many Spaniards remains very difficult." Rehn noted that Spain has already taken effective measures to deal with its budget deficits in 2012 and 2013, although measures for 2014 did not come within expectations. Worries over Greece also eased after reports emerged that it would receive 44 Billion Euros worth of aid in a single tranche, which is viewed by many as bullish for the shared currency.
In the UK, speculations that the Bank of England would add more stimulus-measures to the economy increased after it said that the economy could be in a period of persistent low growth. Last week, the central bank held off its asset purchase program at 375 Billion Pounds as the officials maintained a wait-and-see approach on the program's effectiveness. However, recent comments from the BOE could signal a potential QE in the near-term, after an economic report showed that the number of people claiming unemployment benefits in October climbed by 10,100, the largest increase since September of 2011, although the unemployment rate dropped to 7.8 percent. With Britain's labor market sending mixed signals to the economy, the next monetary policy decision of the BOE is likely to be influenced. With all these factors, a long position for the Euro-Pound is recommended in today’s European trades.
For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions