Sterling inched higher against the euro on Thursday after investors learned little they were not expecting from ECB President Mario Draghi about a new bond-buying plan to tackle the euro zone debt crisis. Draghi said the European Central Bank would undertake unlimited, short-dated bond purchase under strict conditions to ease funding pressures on governments that sought help. He added that the ECB would not expect better treatment than other creditors in the case of default.
His comments were in line with market expectations after many of the details were leaked in advance, meaning much of the positive news was already priced into the single currency. "The market is underwhelmed because (the plan) had been leaked ahead of time and people were pretty sure of what it would contain," said Paul Robinson, head of European FX research at Barclays.
The euro dipped 0.1 percent against sterling to 79.12 pence. It earlier climbed to a session high of 79.49 pence after the ECB kept rates on hold, wrongfooting some investors who had positioned for a cut. Sterling was close to flat against the dollar at $1.5902, retreating from Wednesday's 3-1/2 month high of $1.5940.
With so much focus on developments in the euro zone, there was little reaction to the Bank of England's decision to hold interest rates at 0.5 percent, and leave the quantitative easing total unchanged at 375 billion pounds. The pound has been buoyed in recent sessions by expectations Draghi would announce bold steps to stem the debt crisis. The euro zone is the UK's biggest trading partner and any easing of the debt crisis is seen as positive for sterling, especially against the dollar.