ECB Strikes Hawkish Tone
The Euro strengthened yesterday against both the Dollar and Pound Sterling to then perform a full reversal in the wake of the European Central Bank’s March policy update. The central bank helped the common currency higher after stating ending its quantitative easing programme in quarter three of 2022 in what was perceived by markets as an ‘hawkish’ tilt.
Economists have been wary however, that the ECB would strike a more cautious tone at the March meeting given the significant geopolitical deterioration regarding Ukraine and Russia which threatens to negatively impact Eurozone growth rates over coming months but the central bank showed a united front and deemed they were ready to change their schedule should they see fit.
In level terms, the EUR/USD opens this morning below the 1.10 region with GBP/EUR trading within a tight range just over the 1.1920 mark. Cable (GBP/USD) was showing some signs of improvement but has since fallen back to trade circa 1.3080.
As we end the week, markets will be continuing to digest yesterday’s hawkish ECB meeting as well as keeping a close eye on developments in relation to the war in Ukraine.