By Simon Eastman
Yesterday we saw comments from the European Central Bank, member Francois Villeroy de Galhau, who stated markets had overreacted to last week’s ECB meeting.
Sterling was trading at multi year highs after the Bank of England raised interest rates, but the gains were short lived as the ECB meeting saw markets predict interest rate intervention within the bloc, as early as July, having previously been told the ECB was not considering raising rates at all. This had been keeping the single currency weaker against both sterling and the US dollar. The market’s reaction on Thursday saw GBP-EUR tumble two cents, and further still, testing resistance floors several times.
Following the comments on Tuesday by Villeroy, the markets obviously started to back track on that expectation with the euro losing value against both sterling and to a lesser degree, the US Dollar. GBP-EUR moved up by over half a cent by mid-morning although traded rangebound for the rest of the day as we had another day of not much data releases.
Just US goods and services trade balance of any note yesterday which came out a little over expectations but not valued enough to cause much market movement. Today is not much busier, with just German trade balance early doors followed by a couple of central banker speeches both at 17.00,with the Feds Mester and Bank of Canada Governor Macklem.
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