The European Central Bank held rates steady as predicted, and resistance has remained in the EUR/GBP exchange rate.
EURGBP – Daily Chart
The EURGBP has found resistance at 0.8580 and now trades at 0.8550. The larger support level comes in at 0.8500 for the weeks ahead.
The European Central Bank held interest rates steady for a fifth straight meeting on Thursday but gave its strongest hint that rate cuts could be coming.
The ECB said in a statement, “it would be appropriate to reduce the current level of monetary policy restriction” if inflation continues to move toward 2%.
“We are not assuming that what happens in the euro area will be the mirror of what happens in the United States,” President Christine Lagarde said.
Policymakers and economists have been targeting June as the month when rates could come down after the ECB trimmed its medium-term inflation forecast. Price inflation slowed further in March. June will also be the first month when officials will have a complete set of data on first-quarter wages.
Lagarde added that the ECB won’t wait until all the items that make up its inflation basket are down to 2%. She also said policymakers will be “attentive” to how oil prices trade after recent increases in geopolitical tensions.
The Bank of England has been less forceful in its language due to the higher inflation rates in the UK. That will keep pressure on the euro versus the British pound in the coming weeks until further data is available.
