EUR/GBP Fundamental Forecast – September 9, 2016

The EUR/GBP added 37points to trade at 0.8464 after the ECB held rates and surprised markets by adding no additional monetary stimulus. The European Central bank also “reaffirms” that it will run its quantitative easing program until March 2017, or beyond if needed. The European Central Bank has left interest rates across the Eurozone unchanged at today’s meeting.

That means the headline rate remains at zero, and the deposit rate (levied on bank deposits left at the ECB) stays at -0.4%.

That’s broadly as expected, but those who were looking for new stimulus measures may be disappointed.

There are several ways that Mario Draghi could boost his existing quantitative easing scheme. Currently, the program is buying €80bn of government and corporate debt each month – but the ECB could buy more, run the scheme for longer, or tweak the rules.

Sterling halted a five-day advance after reports showing declines in UK house prices and manufacturing output highlighted lingering risks in the aftermath of the Brexit decision.

Members of the Monetary Policy Committee, including governor Mark Carney, testified before UK politicians following the Bank of England’s decision to boost stimulus in August.

Mr Carney stood by the actions, while colleague Kristin Forbes said there may be a case for additional easing in the future.

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Upcoming Economic Events that you should be monitoring:

 September 9, 2016

Government Bond Auctions

Date Time Country Auction

Sep 08 11:00 Ireland Holds bond auction

Sep 08 17:20 Italy Announces details of bond auction