The euro resumed its advance for a second straight session against the British pound on Tuesday, trading near its highest level in five weeks, on rise in German bund yields compared to relative U.K. bonds.
Yields in the bond market has remained the main catalyst to major currencies, where the rise in German 10-year bond yields helped the euro to overshadow the lingering concerns stemming from Greece.
Last week, the difference between German 10-year bund yields and U.K. gilts with the same maturity narrowed to the least since February.
There will be no more stimulus because of the rising European debt yields, the ECB said last week.
The improvement in economic data, more specifically inflation figures, helped the euro to gain some strength.
Euro area CPI for the year through May surged to 0.3 percent, while the ECB raised its inflation forecast for this year.
The single currency soared on Monday after a report showing German industrial production edged up 0.9 percent in April.
Greece submitted a new form plan to its creditors this morning, according to the AFP newswire.
“I think we’re very close to an agreement on the primary surplus for the next few years,” Prime Minister Alexis Tsipras said in an interview with Italian daily Corriere della Sera published on Tuesday.
Tsipras is looking for a compromise deal that entails raising VAT a little, offering a higher primary surplus target this year and dropping demands for cuts to pensions or other social spending.
Greece’s creditors proposed last week to extend the bailout program until March 2016 in return for measures encompassing pension cuts and tax increases, according to the Wall Street Journal that cited unnamed sources.
As of 09:28 GMT, the euro traded around 0.7373, yet pared some of the gains after it hit a high of 0.7387 on the back of a report showing U.K. trade gap marked its lowest in 13 months in April.
It is worthwhile to mention, the pound faced some downside pressure last week after reports signaling a slowdown in manufacturing and services activity in May.
U.K. CPI inflation tumbled to negative territories for the first time since 1960, raising expectations the BOE would delay its interest rate hike until late 2016.
Later in the week, BoE Governor Mark Carney will deliver his annual Mansion House speech.