Euro saw a brief dip against the pound yesterday noon and is still weak today, as the ECB announced that it would cut rates by 10 basis points to -0.5%. Quantitative easing is expected to resume in November, albeit at a lower rate than expected, €20 billion rather than €30 or €40 billion.
Looking to the future, the Governing Council didn’t rule out further cuts, saying they ‘now expect key ECB interest rates to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within our projection horizon.’
The EU appears divided on the issue of a potential Brexit extension for the UK, with France saying it would veto further action, but Angela Merkel stating earlier this week that there was ‘every chance’ of a last-minute deal.
This morning, German wholesale prices declined for a third month running, in another less-than-positive sign for the Eurozone’s largest economy. Later this morning, we will see EU balance of trade and wage growth figures, as well as hear from the Bundesbank’s Mauderer.
