The euro climbs against sterling following the Bank of England’s actions to hold the benchmark interest rate steady at 0.5%

The euro climbs against sterling following the Bank of England’s actions to hold the benchmark interest rate steady at 0.5%. Yesterday was a positive day for risk sentiment, as the euro climbed against sterling and posted the biggest daily gain in almost two months, after the Bank of England held the benchmark interest rate steady at 0.5%.

The announcement came after official data showed that manufacturing production in the U.K. fell unexpectedly in November, while industrial production also followed the same trend.

Mario Draghi said he saw signs of stabilization in the European economy and Spain sold €9.98 billion of notes, which was double its €5 billion target set for the auction. Italy also auctioned €8.5 billion of one year bills at 2.735 per cent, as the yields reduced to almost a half since the last auction.

Data this week also showed gains in German exports and French business confidence, although the euro will still struggle not to fall into a recession. Mario Draghi also said he was very concerned about the pressure Hungarian authorities appear to be putting on the country’s institutions including the central bank. Today Italy will sell bonds due in 2014 and 2018. Further pressure may weigh on the euro as a spokesman from Merkel’s constituency stated that a Greek exist will not cause too much of an effect on the euro crisis. Could this be a real warning or is it simply a stance to calm market nerves?

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