Saxo Bank's Hardy: Pound will appreciate to 75 pence per euro in second half of 2015

“The main interest has been the big euro-sterling drop and to what degree that has been inspired by anticipation of the ECB and to what degree was it aggravated by the SNB walking away from the euro-swiss floor,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. 

“My inclination is to believe its going to head a bit lower, but there are some long-term structural issues with the U.K. and the pound will be relatively constrained to the downside.”

In Hardy's opinion, the U.K. currency will appreciate to 75 pence per euro in the second half of the year.

On Tuesday the British currency gained against the euro amid speculation the European Central Bank will announce a plan to buy the region’s government bonds this week, a policy measure that may debase the 19-nation shared currency.

Sterling has appreciated against the single currency nine times in the past 10 days. The euro’s losses were exacerbated by the Swiss National Bank’s unexpected decision to remove the franc’s cap against the euro. Gilts declined as the U.K. Debt Management Office sold 3.75 billion pounds ($5.68 billion) of five-year government bonds at the lowest auction yield since May 2013.

The pound gained 0.6 percent to 76.34 pence per euro at 2:01 p.m. London time after weakening 0.6 percent on Jan. 19. It reached 75.96 pence per euro on Jan. 16, the strongest level since February 2008. Sterling rose for the first time in four days versus the dollar, climbing 0.5 percent to $1.5193.