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Weekly roundup: Euro pressured by ECB rate outlook

currency-newsWeekly roundup: Euro pressured by ECB rate outlook
The euro found much of it early gains undone last week as the European Central Bank’s (ECB) latest rate decision caused considerable weakness in the single currency.

Despite a string of lacklustre data releases in the first half of the week the euro was able to tick slightly higher in the first half of last week’s session due to the weakness of the other majors.

Capitalising on this at the start of the second half of the week the single currency was bolstered by the Eurozone’s latest PMI readings, with the flash release for December indicating that the bloc ended the year on strong footing, as growth in both the services and manufacturing sectors reached multi-year highs.

However the most impactful event for the euro last week was of course the ECB’s rate decision on Thursday.

While the bank unsurprisingly voted to keep rates on hold last month it was the ECB’s inflation outlook that caused the drop in the euro, with policymakers forecasting that inflation won’t begin to near the bank’s target rate of 2% inflation until at least 2020, suggesting that the next rate hike is still a long way off.

Meanwhile the focus for EUR investors this week will likely be on Germany’s latest business and consumer confidence data, with a possible uptick in both indexes likely to strengthen the Euro.
Currencies Direct

Currencies Direct

Currencies Direct is one of Europe's leading non-bank providers of currency exchange and international payment services. Since we were formed in 1996, we've maintained our focus on providing innovative foreign exchange and international currency transfer services to corporations of all sizes, online sellers and private individuals. We have also expanded our services to provide dynamic and pioneering "business to business" solutions to help companies, tier 2/3 banks and other non-bank financial institutions to process their international payments. Our headquarters are in the City of London (United Kingdom) and we have operations in continental Europe, Africa, Asia, and the United States. Currencies Direct is jointly owned by private equity firms Palamon Capital Partners and Corsair Capital.

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