Euro briefly passes 90p against sterling

Growing optimism about single currency’s outlook underpinning strength

The performance German economy is helping to boost the euro’s position. Reuters

The performance German economy is helping to boost the euro’s position. Reuters

 

The euro gained against sterling and stayed strong against the dollar on Wednesday as investors grew optimistic about the single currency’s outlook with growing doubts about the prospects of the US tax plan also underpinning gains.

With growth from the economic bloc exceeding the US in the third quarter, led by economic powerhouse Germany, investors were becoming more comfortable in holding risky assets in Europe.

The single currency punched through a key technical level of $1.1734 on Tuesday and extended gains on Wednesday to rise 0.4 percent at $1.1853 against the dollar. Against sterling, the euro briefly rose above 90p, before settling at 89.9p, still up 0.4 per cent on the day.

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Dollar weakness

The euro’s strength was also partially a dollar weakness story, and was bolstered by concerns that an ambitious US tax plan may face headwinds even as financial markets have priced in more interest rate hikes next year.

“The dollar is getting hit against the euro and the yen and the strong data out of Europe is definitely a factor with some investors bailing out of the long dollar trade,” said Alvin Tan, an FX strategist at Societe Generale in London.

– Reuters PA