ECB hiked as expected, with more to come

Daily Currency Update

Yesterday the European Central Bank hiked their policy rates as expected by 25bps, taking interest rates to 22 year highs for the region. The deposit rate is now 3.5%, a year ago it was at -0.5%. Despite this and seeing inflation starting to soften, ECB president, Christine Lagarde, is keeping the door open for further hikes. Markets are expecting another 25 bps hike in July but are unsure what will happen in the September meeting.

Off the back of the hike from the ECB, EURUSD rose from 1.0814 to over 1.0950 on the day, an increase of over 100 pips, and is higher this morning. EURGBP also rose after the announcement from 0.8551 to 0.8591 but is lower this morning as Sterling claws back its losses.