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ECB block further € weakness by offering no forward guidance on interest rates

Yesterday, the ECB cut its interest rate by 25bp as expected. There was no movement on the € after the decision (again as expected as the Euro's value has been priced in for one for months), but near-term we believe the € will be resilient following the guidance from the ECB during the press conference.

The failure of the ECB to commit to further rate cuts and to instead go down the 'data depending' route, means we may not see any movement on interest rates for sometime in the EU. Once again, we will potentially see market volatility in-and-around the monthly ECB meetings.

The statement from the ECB was viewed 'hawkishly' by traders, investors and economists in that this is likely not a central bank that is in a rush to ease policy. This is in the short-term offers the € support and with the Euro-Zone economically performing 'well', we should see a resilient Euro for a while.  

For GBP v EUR, we are currently seeing the highest levels in 21-months, making it a very attractive time to book both SPOT and forward, especially when the upside from here looks extremely limited. 

On this day -

In 1494, Treaty of Tordesillas: Spain & Portugal divide the new world

In 1628, English King Charles I ratifies the Petition of Rights

In 1753, British museum founded by an Act of Parliament with royal assent from King George II

In 1929, Vatican City becomes a sovereign state