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Sterling has slipped back into its old downward trend versus the US dollar as traders await US jobs data.
All eyes on ECB
The euro is trading at $1.2627. The single currency has been driven as high as $1.2674 in overnight trading as traders square up their positions ahead of the much-awaited interest rate decision and press conference from the ECB, respectively at 12.45pm and 1.30pm (London time). We are not expecting any change in the interest rate; the focus will instead be on Mario Draghi’s statement. We are expecting to hear the details of the asset-backed securities scheme — historically central banks start off with a stimulus package, see it works and add more if required.
A large ABS buying programme and the possibility of more easing to come could push the euro to $1.2520. Resistance is being encountered at $1.2659.