Euro had a choppy day against the pound yesterday, weaker on the back of UK optimism over the election. Meanwhile, the EU is preparing for post-January trade talks, if Boris Johnson’s deal does pass, with a leaked document from the European Commission urging trade talks to make the ‘best possible use of the limited time available for negotiation and ratification by the end of the transition.’ The EU will discuss the trade talks further at its upcoming summit on 13th December.
GDP figures showed eurozone growth to remain positive but weak, at 1.2% year on year, and just 0.2% on a quarterly basis.
There are hints of a ‘mood change’ at the ECB, with the bank increasingly portraying negative interest rates as a necessary negative that is unlikely to be further deepened. Expectations that Lagarde would go further with easing at the upcoming policy meeting on 12th December are dropping. This comes as various finance ministers, especially from countries like the Netherlands and Germany, have voiced concerns that monetary easing is reaching the reversal point, the line at which it crosses from positive effects to negative. This has thus far been denied by the ECB’s Philip Lane.
