Home Daily Commentaries Euro gains due to European Central Bank comments

Euro gains due to European Central Bank comments

Daily Currency Update

European Central Bank President Christine Lagarde said this morning that she saw the ECB's deposit rate at zero or "slightly above" by the end of September, implying a potential interest rate increase of at least 50 basis points from its current level, and that there could be further raises if it saw inflation stabilizing at 2%.

The market is now pricing for a potential 25 basis point interest rate increase in July, followed by another 25 basis points in September. Analysts are also suggesting that there could be follow-up interest rate increases on October 27 and December 15, which would take the deposit rate to 0.5% by year-end. This news had a positive impact on the euro and it experienced some gains against the US dollar and the pound.

Key Movers

The US dollar showed slight gains this morning as the safe-haven asset regained some of its overnight losses. There were positive signs for the global economy, with the Chinese city of Shanghai expected to lift its lockdown soon, and US President Joe Biden's comments earlier in the week about a possible easing of trade tariffs for China, lifting risk sentiment at the dollar's expense.

Investors now await the release of global manufacturing PMIs over the course of the day.

Expected Ranges

  • GBP/USD: 1.2475 - 1.2535 ▼
  • GBP/EUR: 1.1615 - 1.1695 ▼
  • EUR/USD: 1.0705 - 1.0775 ▲