Euro extended its gains as bets regarding an expected interest rate hike by the ECB heightened

European equities

Buoyed by investors and analysts’ bets towards the possibility of the ECB or the European Central Bank raising interest rates sooner than expected after the ECB debate on Monday, the euro extended its gains against the dollar on Tuesday. The euro settled at $1.2341 EUR= against the greenback.

The positive stance of the euro is supported by reports on Monday indicating that the ECB officials were changing their debate focus from bond purchases to the expected path of interest rates, which led to investors and analysts raising their bets towards a sooner than expected interest rate hike from the European Central Bank.

However, the British pound sterling also edged higher against the single currency, supported by the positive Brexit transition deal on Monday. Sterling capped a high of $1.4088 in early trade on Monday, before settling at $1.4035 against the dollar which was 0.1% higher from the pound’s previous settlement.

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