LONDON Nov 24 Sterling slipped from an 11-day
high against the euro on Monday after data showed German
business morale rebounded in November, offering some relief to
the battered common currency.
The euro had come under intense pressure, dropping towards
two-year lows against the dollar, after European Central Bank
chief Mario Draghi said on Friday that "excessively low"
inflation had to be raised fast by whatever means necessary,
prompting bets on further stimulus in the euro zone.
Draghi said there was no sign of economic improvement in the
months ahead and that the ECB would expand and step up its
programme to pump more money into the economy if its current
measures fell short of lifting inflation.
The euro was up 0.1 percent at 79.225,
recovering from an earlier low of 79.035 pence after the
Munich-based Ifo think-tank said its business climate index had
risen to 104.7 in November from 103.2 in the previous month.
"The Ifo has given temporary relief but any bounce in the
euro will be sold into. Euro/sterling is likely to find
resistance at around 79.50 pence," said a London-based spot
In contrast to the euro zone, where investors are pricing in
more quantitative easing, in Britain traders are still looking
for the Bank of England to tighten monetary policy. However, the
expectations of a rate hike have been pushed back to the fourth
quarter of 2015 from mid-2015, putting pressure on the pound.
Sterling rose against the dollar to $1.5700, although it
wasn't very far from 14-month lows of $1.5590 struck last week.
Investors are wary due to signs of moderating growth in the UK
economy and increased political risks ahead of a national
election next May.
"The problem with sterling/dollar at the moment is that with
optimism for a rate hike next spring now appearing to be nothing
other than wishful thinking, and with the UK general election
starting to get attention, investor attraction towards the pair
is limited," said Jameel Ahmad, chief market analyst at FXTM.
(Reporting by Anirban Nag; Editing by Gareth Jones and Susan