The euro has strengthened against the pound and the dollar this morning, due to a change of tact from the European Central Bank.
After its strategy review yesterday, the ECB said it will now tolerate levels of inflation above 2%. This is a shift away from its inflation target of ‘just below 2%’, signalling that the Bank will keep interest rates lower for longer. As lower interest rates are typically associated with a weaker currency, it could be said that this euro strength is something of a surprise.
ECB President, Christine Lagarde, will speak at a 11am this morning and is likely to comment on this shift from the central bank.
