Euro Falls As ECB Chief Lagarde Unsettles Markets

The Euro fell against both the US Dollar and Pound Sterling during the course of yesterday’s ECB June monetary policy press conference delivered by Bank President Christine Lagarde. 

The European Central Bank initially sent a clear message of intent in which it signalled a 25 basis point rate hike in July and another in September while lowering GDP forecasts and raising inflation forecasts. The potential 50bp move, however, was stressed on depending inflation expectations

The Euro was relatively steady in response as the guidance was largely as markets expected. The single currency did, however, lose ground once Lagarde fielded questions from assembled journalists. 

In level terms and with the euro holding a weaker tone, the EUR/USD opens this morning circa 1.0625 whilst the GBP/EUR is straddling the 1.1740 mark. Elsewhere, the action in Cable (GBP/USD) has been less eventful with the pair edging lower with the dollar supported by the risk-averse tone on markets and starts today below the 1.25 threshold. 

Datawise and looking ahead to today, the main highlight will be US CPI inflation figures for May with hopes that US inflation may be close to its peak after slowing slightly in April. Consensus for the reading is that the headline rate remains unchanged at 8.3% in May. Elsewhere Canadian employment and unemployment data is due at the same time.