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Euro and GBP rise against dollar on growing ECB expectations

Euro and GBP rise against dollar on growing ECB expectations

The euro rose against the dollar on Tuesday due to optimism that the European Central Bank will unveil a plan to tackle the region’s debt crisis this week, although gains were capped by concerns the plan may lack detail. Strategists said the euro was likely to hold its ground in the run-up to the ECB meeting on Thursday, at which policy-makers are expected to announce a bond-buying scheme to help ease funding pressures on indebted European countries. That speculation was reinforced on Monday when ECB President Mario Draghi said central bank purchases of sovereign bonds of up to three years maturity did not constitute state aid. However, many analysts said with expectations of ECB action running high, there was scope for disappointment that could see the euro slide after the meeting and limit its gains beforehand.

Sterling also rose to a two-week high against the dollar , helped by better appetite for perceived riskier currencies amid growing optimism that the European Central Bank will take bold steps this week to stem the region’s debt crisis. The euro zone is the UK’s biggest trading partner and any easing of the crisis is seen as positive for sterling, especially against the dollar.

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