The euro rose and then fell again this afternoon (May 2nd) on the back of the news that the European Central Bank (ECB) has cut interest rates from 0.75 to 0.5 per cent.
Andy Scott, premier account manager at foreign currency exchange brokers HiFX, explained there was a short recovery for the euro in the immediate aftermath of the ECB's announcement.
But the currency lost value again when president of the ECB Mario Draghi gave a news conference to explain the decision to cut interest rates later in the afternoon.
"We continue to favour a move to 1.20 for sterling against the euro in the near term given the recent run of better than expected data from the UK," said Mr Scott.
He added the ECB was given little choice but to cut interest rates at a time when governments across the continent are having to cut spending and reduce budget deficits.
The ECB's cut to 0.5 per cent represents a new record for European interest rates.
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