Global market stability helped the Pound Sterling hold off Euro strength following the European Central Bank’s (ECB) decision to decrease interest rates by 25 basis points to 3.50% yesterday. The decision had been anticipated and unanimous, resulting in it having little impact on the Euro.
The comments and revised forecasts were positive for the Euro because they did not encourage markets to speculate that the ECB would accelerate the pace of rate cuts. If it had been the case, euro exchange rates would have fallen.
On the other hand, if ECB President Christine Lagarde had fought back firmly against current forecasts of more than one 25 basis point rate decrease in the remainder of 2024, the Euro would have surged.
Looking ahead, Eurozone industrial output is expected to fall by 0.5% in August. In the United States, the initial reading of consumer sentiment is expected to improve modestly in September. However, neither release is anticipated to have a significant impact on the FX markets.
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