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ECB rate decision in focus

business-articlesECB rate decision in focus
  • Pound edges higher after Spring Budget
  • Will the ECB take action?
  • Trump bans European travel
Sterling supported by Spring budget

The pound climbed on Wednesday in response to hopes that the Bank of England’s unscheduled rate cut and a £30bn stimulus package announced in the UK’s latest budget will help limit the impact of the coronavirus on the UK economy.

GBP investors cheered as the BoE and Treasury coordinated their monetary and fiscal stimulus to help UK businesses weather the storm through an expected wider outbreak of the coronavirus in the UK.

Today investors will be focused on the UK’s own coronavirus response, with Boris Johnson set to hold an emergency meeting to discuss the government’s next steps.
 
ECB monetary policy meeting in focus

The euro struggled to find support mid-week after European Central Bank (ECB) President Christine Lagarde warned the economic impact of the coronavirus in the Eurozone could be equivalent to that of the 2008 financial crash unless EU governments are willing to increase fiscal spending.

The ECB’s latest policy decision will be in the spotlight later today, with EUR investors eager to see how the bank will respond to the coronavirus crisis as it threatens to push parts of the Eurozone into a recession.

While the bank is expected to announce some monetary easing, likely in the form of a 0.1% cut to its bank deposit rate, the ECB’s options look extremely limited, hence Lagarde’s call for EU governments to increase spending.
 
US dollar firms after Trump’s travel ban

The US dollar fluctuated through yesterday’s session in response to some uncertainty over whether the Trump administration will be able to pass the President’s coronavirus tax cuts.

However, the currency later derived support from President Trump’s decision to issue a European travel ban.
Investors will remain focused on the government’s coronavirus response today, with any setbacks for Trump’s stimulus package likely to hurt the US dollar.
 

Upcoming Data:

Thursday 12th March

09:30     ZAR Manufacturing Production (January)
12:30     USD PPI (February)
12:45     EUR ECB Interest Rate Decision
13:30     EUR ECB Press Conference
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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