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Euro fluctuates following ECB rate decision

currency-newsEuro fluctuates following ECB rate decision
The euro traded in a wide range on Thursday, following the European Central Bank’s (ECB) latest interest rate decision.

Meanwhile, the pound is trending broadly lower this morning, with GBP/EUR dipping to €1.1741 and GBP/USD subdued at $1.2482. GBP/CAD is muted at C$1.5848, while GBP/AUD and GBP/NZD retreat to AU$1.7532 and NZ$1.9447, respectively.

Coming up, will a fall in US core inflation push the US dollar lower later this afternoon?

What’s been happening?

The euro fluctuated yesterday as the European Central Bank concluded its latest policy meeting.

EUR exchange rates initially spiked after the ECB confirmed it would hike interest rates by 25 basis points in July and that a larger increase may be warranted in September, depending on the inflation outlook.

However, the single currency was quick to relinquish these gains following ECB President Christine Lagarde’s accompanying press conference in which she was unable to ease concerns about potential economic imbalances in the Eurozone which could result from the hike.

The pound, meanwhile, was left muted on Thursday morning following a growth warning from the British Chamber of Commerce (BCC).

However, Sterling sentiment then rebounded in the second half of the European session, as Boris Johnson said the government will introduce supply side reforms to help ease the tax burden in the UK.

At the same time, the US dollar, pushed higher thanks to risk-off flows, with the currency’s gains being slightly tempered after data showed US jobless claims climbed to a five-month high at the start of June.

What’s coming up?

Centre stage today will undoubtedly be the US consumer price index. Economists forecast May’s release will report core inflation will have fallen again.

This could undermine the US dollar as an easing of inflationary pressures may give the Federal Reserve more reason to pause its current tightening cycle after the summer.

Also influencing the US dollar may be the publication of the latest US consumer sentiment index. Will another fall in US consumer morale also drag on USD exchange rates this afternoon?

The euro may continue to be influenced by the outcome of the ECB’s latest interest rate decision through the end of the week, especially if Lagarde offers more insight in a speech later this afternoon.

Finally, the continued absence of any GBP data could leave the pound directionless today.
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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