Following the European Central Bank’s decision to raise interest rates to 2.5% from 2% last week, alongside relatively hawkish comments from ECB president Christine Lagarde, the euro saw a significant boost against the pound on Thursday, which continued into Friday. This morning it has remained steady so far against the pound while starting to climb in early trading against the US dollar.
As Lagarde reiterated, the ECB policy remains to return inflation to 2%, which will require further aggressive interest rate hikes into 2023.
Potentially influential data this week includes Ifo Business Climate for Germany, very shortly, and GfK Consumer Confidence, also for Germany, on Wednesday. As Europe’s largest economy, Germany’s economy is closely watched by the markets and its data has an outsized effect on the euro.
EUR/GBP: the past year
