Home Daily Commentaries ECB Delivers Back-to-Back Rate Cuts as Eurozone Recession Looms

ECB Delivers Back-to-Back Rate Cuts as Eurozone Recession Looms

Daily Currency Update

The European Central Bank (ECB) has taken decisive action to counter a sharp slowdown in the eurozone economy, implementing its first back-to-back interest rate cuts since the 2011 euro crisis. With Germany teetering on the edge of recession and inflation falling across the 20-member currency bloc, the ECB followed its September rate cut with another 0.25 percentage point reduction, bringing the deposit rate to 3.25%.

This third cut of the year is likely to weaken the euro, as lower rates reduce the appeal of euro-denominated assets, potentially driving investors toward higher-yielding currencies like the US dollar or others.

Key Movers

The dollar is on track for its third consecutive weekly gain, supported by strong US economic data and a dovish European Central Bank. This has led markets to delay expectations for US rate cuts, with additional uncertainty stemming from the potential for a Donald Trump presidential victory.

The stronger dollar is putting pressure on the euro and other major currencies, as investors adjust their positions to reflect a prolonged higher interest rate environment in the U.S.

Expected Ranges

  • GBP/USD: 1.3015 - 1.3095 ▲
  • GBP/EUR: 1.2015 - 1.2065 ▲
  • GBP/AUD: 1.9405 - 1.9495 ▲
  • EUR/USD: 1.0785 - 1.0865 ▼

Written by

See Wah Li

OFXpert

See Wah is passionate about supporting positive transformations when it comes to managing foreign exchange. As a Senior Currency Consultant at OFX, his goal is to help businesses make informed decisions, alleviate risks, and enhance their currency strategies for success. With over 6 years of experience in the foreign exchange market, See Wah’s strength lies in developing effective solutions to help navigate the complexities of currency fluctuations and mitigate their impacts on business profitability.