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Focus on ECB meeting today

Sterling inched lower today, with dealers citing growing resistance to any further recovery against the dollar on a day set to be dominated by events in Europe and the United States.

The pound has been supported by broad-based US dollar weakness in 2017. On the other side, UK data has also been struggling and on the Brexit front, there has been a growing tension between EU and UK officials.

Investors have doubled net speculative bets against the pound and in favour of the dollar in the past three weeks, taking them to their highest since early May.

Analysts polled this week said that sterling stood a 25% chance of weakening to parity with the euro in the coming year, although only a few said that was their central forecast.

Thursday’s session in Europe should be dominated by the European Central Bank’s policy statement and post-meeting news conference, which starts at 1330 GMT.

The euro drifted higher against a broad swathe of currencies before the European Central Bank meeting where policymakers may strike a cautious tone about the currency’s strength.

Only 15 of 66 economists polled expect the ECB to announce a reduction of its monthly asset purchases at today’s meeting.

It is all about the ECB today, Draghi always has a message and there is always some reaction to the fx markets.

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