A Week Of Contrasts For Euro And Pound
(2 min read)
This mood music over the past few days has been in stark contrast between Frankfurt and London. ECB president Christine Lagarde today presented a reasonably upbeat assessment on the Euro area, while reiterating more stimulus would be added if needed. While in London, PM Boris Johnson is facing sharp criticism from the EU for publishing new legislation that would rescind parts of the signed EU withdrawal treaty. EUR/GBP price action reflects the different fortunes.
ECB Opens the Door For Further Euro Appreciation
A slight upgrade to the ECB’s GDP growth and inflation projections (including an upward revision to 2022 core inflation) set the tone for a cautiously upbeat press conference. Risks to growth remain on the downside, particularly given the rising number of COVID cases and slowing service sector momentum, and the forecasts highly uncertain. But the combination of fiscal and monetary support, and an improving external backdrop saw the ECB move up this year’s GDP forecast to -8.0% from -8.7% earlier.
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