The euro recovers ahead of the ECB meeting which is likely to point to June for that first rate cut. Encouraging sentiment data and soft inflation provide conflicting dynamics
Look out for more urgency in the statement. If 2022 is anything to go by, keep an eye out for any potential pre-commitment to June in the statement. Back in June of 2022, the ECB announced that is ‘intends to hike rates by 25 bps’ at the next meeting. However, considering markets have already priced in a cut in June, the actual market response may prove to be contained.
Eventually, the pair will move on from the zone but the right catalyst is yet to present itself and the generally depressed FX volatility has failed to provide the necessary momentum to chart a new course. As long as this remains the case, EUR/GBP is likely to favour the familiar trading range beneath 0.8578.Next week the European Central Bank will deliberate the ideal time to start cutting interest rates but before that, crucial US CPI data will demand the markets attention.
Then, in Europe, the final German inflation print for March is expected to see further progress. Disinflation in Europe is continuing, in contract to the US, and may stress the need for June to bring about that first rate cut.Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances.
We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Information presented by DailyFX Limited should be construed as market commentary, merely observing economical, political and market conditions. This information is made available for informational purposes only. It is not a solicitation or a recommendation to trade derivatives contracts or securities and should not be construed or interpreted as financial advice.
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