Home Daily Commentaries ECB hikes by 25 bps

ECB hikes by 25 bps

Daily Currency Update

Yesterday the ECB hiked rates by 25 bps in their tenth consecutive increase in interest rates since July 2022. After hiking by 450 bps, the ECB's deposit rate is at a record high. The reason for the increase in rates is due to the central bank still trying to combat inflation, ECB projections show inflation at 3.2% in 2024 and 2.15 in 2025.

EURUSD dropped following the hike from the ECB and the pair traded below 1.0635 earlier this morning. GBP has also traded lower versus the dollar managing to just cling onto 1.24 before rebounding this morning. The Bank of England meets next week and is expected to follow the ECB in hiking.

US retail sales came in higher than expected at 0.6% against 0.1% expected in August showing further resilience for the US economy.

Key Movers

It is relatively quiet on the data front today. Markets await the US Michigan Consumer Sentiment Index and 5-year consumer inflation expectation later this afternoon. ECB president Lagarde is also due to speak this morning following yesterday's interest rate hike.

Expected Ranges

  • GBP/USD: 1.2350 - 1.2500 ▲
  • GBP/EUR: 1.1600 - 1.1700 ▲
  • GBP/AUD: 1.9100 - 1.9300 ▼
  • EUR/USD: 1.0620 - 1.0750 ▲