Money News Overview Thursday 6th June: Markets await ECB rate cut

The primary focus is on Europe, where the Consumer Price Index (CPI) is set to be released at 10 AM UK time. Markets expect a slight rise in inflation, from 2.5% to 2.6%.

This morning, a flurry of European economic data has already been released. German industrial figures showed a downturn in new purchase orders that came in below the market consensus for the fourth consecutive month at -0.2 percent (forecasted 0.5 percent).

Todays most crucial economic event is the European Central Bank monetary policy announcement, which will be closely monitored by investors.

Markets are expecting the ECB cut interest rates before the Federal Reserve and the Bank of England, investors have priced in a 25-basis point cut to reduce the headline rate to 4.25 percent.

ECB President Lagarde’s speech will be carefully watched to see her outlook on when the next rate cut will be, however future wage data and inflation figures could shift her decision.

Elsewhere in the European Union, the change in the value of all goods sold is expected to fall -0.3 percent in April. This forecast further supports the ECB’s decision to reduce rates.

GBPEUR has been fairly flat in the build up to the ECB interest rate decision today. This week Pound to Euro has been trading in a tight 40-point range struggling to find any volatility, this is expected to change later on today after the ECB refinance rates.