EUR falls

EUR falls

So on a day that was supposed to be focused on GBP and USD it was the Euro that really stole the headlines:

A Bloomberg report said the European Central Bank was considering cutting its deposit rate, one of its two key interest rates, to below zero, thus making it highly unattractive for major banks to deposit funds at the ECB and, hopefully, force them to lend instead. The objective would be to fuel a stronger economic recovery through lending.

An ECB spokeswoman declined to comment on the unsourced report, while another central bank official said that other central banks, and corporate lenders have adjusted their internal systems to cope with negative deposit rates should they come.

The main event of yesterday, the US FOMC Minutes showed there was some appetite for tapering in the near term – although vague, this did give USD a small boost, driving GBP/USD below 1.6100.

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