The British pound is up against the euro on Thursday.
- ECB leaves interest rates on hold in July meeting, as expected
- Lagarde says ECB have slowed PEPP purchases, will use full amount
- UK retail June jobless rate falls
- EU official: not there yet on agreement for next budget / recovery fund
GBP/EUR was lower by 16 pips (+0.14%) to 1.1039 as of 3pm GMT. The pound-euro exchange rate is down by -1.19% this week.
The currency pair had been drifting lower for most of the day but shot higher after finding support at 1.10 but stabilised less than 1.105. Yesterday it rose by a similar +0.13%.
EUR: ECB leaves rates on hold, has reduced PEPP purchases
The ECB meeting dominated FX markets on Thursday, as it typically will. Traders mostly sat on their hands in case of some unexpected result, but that was not to be found.
The ECB left interest rates on hold and kept the PEPP asset purchase program unchanged in size and duration. The standout comment that triggered a small drop in the euro was that the central bank has slowed the pace of purchases because markets have stabilised. That means less financial support is being provided to the economy.
In her press conference ECB President Christine Lagarde said the ECB was happy with the current state of monetary policy. Remember the ECB increased the size of its bond purchase program (PEPP) by €750 billion last month. Lagarde did say that that the baseline is that the central bank will buy up the full PEPP ‘envelope’ (1.35 trillion) which hadn’t been clear from previous meetings.
More important than the ECB at this juncture for the euro is tomorrow’s EU Summit. Expectations are that an agreement will be reached. However a senior EU official was quoted today as saying “we are not there yet on agreement on next EU budget and recovery fund.” Adding “governance of the EU recovery fund, climate targets and the rule of law is all still under debate
