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Market Update

ECB left policy and guidance unchanged at today’s meeting. the European central bank’s new President Christine Lagarde reaffirmed that the current performance of the EU economy justifies the need for negative interest rates. 

The euro was 0.32% lower against the US Dollar at 1.1055, dropping as 1.1037, its weakest it has been since December 2nd.

On Thursday the sterling pound continued to build on the one-month high it reached against the euro. As data this week reduced market expectations of a central bank rate cut and the next decision meeting next Thursday.

The Market is now suggesting a 50% chance of a 25 point rate cut at next week’s Bank of England policy meeting, down from 70% on Monday.

The focus now is Friday’s January purchasing managers’ index, one of the best indicators for the UK’s economy performance, a decrease in the figure could see the possibility of a cut drastically increase putting weakness into the pound.

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