Home Daily Commentaries ECB roll out stimulus package

ECB roll out stimulus package

Daily Currency Update

GBP - British PoundSterling has had an extremely positive start to the day as GBPUSD has broken the 1.24 level for the first time since 26th July. This move occurred despite DUP lawmakers coming out and shutting down Brexit optimism stemming from a report claiming there had been a breakthrough in backstop negotiations. In other Brexit news, Scotland’s highest court of appeal has ruled Johnson’s suspension of parliament ‘unlawful’ and has prompted calls for MPs to return to parliament and resume the battle for Brexit clarity. The range of differing reports being released have left investors in a tricky situation and many have decided to leave the pound on the sideline, trading other currencies and commodities until the Supreme Court makes it’s ruling on the parliamentary shut down next week.

Key Movers

Yesterday saw the ECB release their stimulus plan in an attempt to combat the slowing growth and economic disarray in the Eurozone. With Germany expected to enter a technical recession next quarter, the ECB had no choice but to roll out a massive stimulus package. The key elements to take from the plan are as follows:• Interest rate cuts by 10bp to -0.5%• Restarting of their QE cycle (€20bn p/m start on Nov. 1)• Changed their TLTRO rates• Reduced growth and inflation forecasts until 2021The news has also meant that the Federal Reserve are now almost guaranteed to cut rates next week, which has affected the USD negatively. We see a release of US Retail Sales at 1:30pm today.

Expected Ranges

  • GBP/USD: 1.2350 - 1.2475 ▲
  • GBP/EUR: 1.1110 - 1.1260 ▼
  • GBP/AUD: 1.7930 - 1.8050 ▲
  • GBP/NZD: 1.9305 - 1.9480 ▲