Pound manages to advance but the outlook favours the euro

The pound to euro exchange rate is 0.09 pct in the blue at 1.1579 at 12:30 on Thursday; these gains come following a flat start to the day.

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The euro is broadly firmer right across the currency markets in line with positive risk sentiment across global markets. A week US dollar has also come to the aid of the euro.

While the British pound may have squeezed out some gains against the euro we note that analysts continue to favour the shared currency.

Luc Luyet at MIG Bank says he says he favours a bullish bias in the EUR-GBP pairing (ie. EUR gains):

"EUR/GBP is moving above its resistance at 0.8637 (17/04/2013 high). However, the price action remains very volatile. Given the recent new highs, a short-term bullish bias is favoured as long as the hourly support at 0.8575 (10/07/2013 low) holds. An hourly resistance can be found at 0.8694 (intraday high).

Meanwhile analysts at UniCredit Bank see a consolidation for this pairing at current levels, "EUR-GBP could now consolidate gains above 0.8650."

Today's gains by sterling come after a strong session for the euro yesterday.

"The EURGBP rebounded yesterday, following the sharp bearish shooting star candle, as shown on chart. However, we prefer to see a daily closing above the high of the shooting star candle at 0.8667 to confirm further upside and the continuation of the bullish move. Anyway, we will expect a bullish move today, but with a tight stop," say ICN Financial Markets.

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