Forex Flash: Euro and Pound remain under pressure against USD - BTMU

Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the euro and pound continue to remain under downward pressure against the US dollar with EUR/USD and GBP/USD attempting to break below 1.30 and 1.50 respectively.

He feels that political uncertainty remains elevated in Italy, with the main parties appearing no nearer to reaching an agreement to form a new government. He writes, “President Napolitano is exploring the possibility of putting together a coalition between the center-left and center-right parties with neither Bersani nor Berlusconi becoming the Prime Minister.” Hardman feels that the euro and pound also remain vulnerable to the downside ahead of this week’s ECB and BoE meetings. He writes, “The BoE appears closer to implementing more stimulus than the ECB requiring only two more members to join Governor King in voting for GBP25.0 billion of gilt purchases. The services PMI survey for February released tomorrow could prove pivotal following the weaker than expected manufacturing PMI.”