After rising against the pound and dollar in the early trading hours yesterday, the euro has since fallen as markets assess the European Central Bank’s latest monetary policy meeting.
The euro initially took strength from “hawkish” comments by the ECB. The Bank said that it is willing to end its quantitative easing programme in Q3 of 2022, a month earlier than previously thought, which raised expectations for a potential rate hike in Q4 of 2022.
But the single currency soon fell when markets factored in the potential for “stagflation” – an economic environment in which there is both persistent high inflation and high unemployment – as a result of the Russia-Ukraine war.
