Yesterday afternoon the euro got a slight boost against both the pound and the US dollar after a speech by European Central Bank (ECB) President Mario Draghi.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR3.68%€8,289

Draghi announced some bolder than expected monetary policy plans which is why the euro strengthened, as many had expected him to focus on the slowing economy and negative signs within the Eurozone. There was no announcement of a first interest rate hike for the Eurozone since the financial crisis a decade ago, but the ECB does intend to continue paying banks for lending which will hopefully boost the ailing economy. This is why the euro saw a slight boost yesterday.

Could Monetary Policy Meeting Accounts provide further details on stimulus package next week?

The interest rate is expected to remain at its current level until at least the first half of 2020, which is a change from the ECB’s comments back in March. A poll held by reuters suggests that many experts don’t expect a rate hike until 2021, and a number of economists remain weary that the ECB is running out of options to stimulate the economy, and that the area is particularly sensitive to important economic issues.

With the US-China trade war heating up, some areas of the Eurozone economy have come under heavy scrutiny with Germany’s export industry, in particular car exports being at risk.

It’s for these reasons along with the stubborn inflation levels that the markets had expected a more bearish commentary from Draghi.

I think euro sellers should be weary of further signs of struggle and the Budget issues in Italy along with the threats of fines to the country could also spill over, and could result in euro weakness.

German and Italian data due to be released this morning

German trade balance figures will be released this morning, and they will cover the balance between exports and imports of total goods and services. The same figures will also be released out of France and Retail Sales data will be released out of Italy so do feel free to get in touch if you would like updates on these data releases.

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