ECB decision comes into focus
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Daily Currency Update
The White House announced late on Wednesday a one-month exemption from the newly imposed 25% tariffs on vehicle imports from Mexico and Canada. A Bloomberg report also showed that US President Trump is planning to exempt certain agricultural products from the tariffs imposed on the same locations. These have eased market sentiment, with many market participants believing the increased levies will be lowered, moved and potentially not imposed on other locations.GBP/USD broke 1.2900 after a volatile 48 hours, touching 1.2915 at the highs. The currency pair has moved lower at the start of the European session. EUR/USD touched 1.0800 and isn’t trading too far from this psychological level.
Key Movers
Market participants focus will be on the ECB meeting today, with the central bank widely expected to cut rates. This would be the 5th time since last June that the ECB has reduced rates, which would take the deposit rate down to 2.5% if the 25 basis point cut goes ahead. However, It will likely be comments from ECB President, Christine Lagarde, following the decision that will likely sway the Euro as future guidance will be given amid uncertainty over the global economic outlook. This alludes to the looming trade war with the US, while both Germany and the European Commission have announced changes in fiscal rules to boost defence and infrastructure spending - a move that could impact growth for years.EUR/GBP has moved below 1.2000 and opens up closer to 1.1900 this morning. Outcome of today could either first support the Euro or hinder these moves, especially as ‘Trump Tariffs’ remain a concern, although a slightly eased concern with lightening tariff changes on both Canada and Mexico.
Expected Ranges
- GBP/USD: 1.2780 - 1.2920 ▲
- GBP/EUR: 1.1850 - 1.2010 ▼
- GBP/AUD: 2.0250 - 2.0410 ▼
- EUR/USD: 1.0710 - 1.0860 ▲