The rally in the Euro followed comments from ECB President Mario Draghi at a central bankers’ conference in Portugal suggesting that deflationary forces had been replaced by reflationary tendencies. Draghi however tried to temper his hawkish tone by adding that any change in the ECB's monetary policy stance would be gradual, especially when taking into account the Euro Area economy’s need for "considerable" monetary support.
A raft of recent economic indicators suggests activity in the region is gaining momentum. Investor speculation has been growing that the ECB will announce further asset purchase cuts during the second half of the year. The positive assessment of the economy from a traditionally more dovish Draghi has further reinforced that view. In the aftermath of the remarks, EURGBP has been surging higher, surpassing key resistance at 0.8870 and was last seen trending around the 0.8880-mark.