Euro Exchange Rate: EUR Advances Against Pound Sterling and US Dollar as We Close Out the Week

Meanwhile gains were seen against the British pound (GBP) mid-week with the GBP suffering a fresh bout of weakness blamed on a data release that came in below expectations.

For your reference, the following levels are witnessed at the time of writing:

• The euro dollar exchange rate (EUR/USD) is 0.13 pct higher on a day-to-day comparison at 1.3380.
• The euro pound exchange rate (EUR/GBP) is 0.29 pct higher at 0.7963.
• The euro to Australian dollar (EUR/AUD) is 0. 29 pct higher at 1.4458. If you are wondering what is happening to AUD, read our report here.

Note: All quotes here are wholesale in nature; they are subject to a discretionary spread by your FX payments provider. An independent provider will guarantee to undercut your banks offer, in some instances they are able to offer up to 5% more FX. Please learn more.

What is driving the euro at the moment?

Speaking after the monthly rate decision, President Draghi reiterated that risks to the 18-member economy remained to the “downside.”

Mr. Draghi also said that heightened geopolitical tensions can be a negative for the 18-member economy.

Indeed, many commentators are blaming the turmoil tied to the crisis in Ukraine for the current bout of selling pressure.

Reports of 20,000 Russian troops amassed along the Ukrainian border spooked investors yesterday and sent riskier investments tumbling and boosted demand for the safe-haven US dollar.

"Markets found another reason to shun the euro after growth data showed that Italy slipped back into recession, its third since 2008," notes Joe Manimbo at Commonwealth Foreign Exchange.

The ECB looms on Thursday and poses another downside risk for the single currency.

No policy changes are expected, following big policy moves in June to lower interest rates.

"But any hint that the bank is closer to deploying further stimulus steps in coming months would risk a faster fall in the euro. Still, with so many in the market betting on further euro weakness, the slightest trigger, like a less dovish sounding ECB, could see the euro catch a bounce," says Manimbo.

The analyst warns currency market watchers to tread carefully in the current environment.

Pound dollar's heavy tone confirmed

The mid-week sessions have seen little relief for the pound against the dollar.

Sterling fell against the resurgent U.S. dollar overnight after data showed that U.K. manufacturing output grew at a much slower pace than expected in June.

The data added to the pound’s heavier tone against the dollar amid a general flight to safer assets across global financial markets.

British industrial output rose 0.3 percent in June which was half the expected rise of 0.6 percent.

"The pound has a high sensitivity to data which the market uses to fine tune forecasts for a Bank of England rate hike. Sterling caught a bounce Tuesday in data showing the fastest services growth in eight months. A pillar the pound still has going for it is that the BOE is expected to raise rates before the Fed and ECB," says Manimbo.

The BOE meets Thursday though no policy changes are expected.