- EUR/GBP drops
- ECB maintains current rates
- ECB enhances PEPP with €600 billion
The EUR/GBP is trading sideways after the ECB decided to maintain the current interest rate and decided against immediate additional stimulus despite the gloomy economic outlook and risk of economic variance within the bloc.
Time : 07-17-2020
Pivot : $0.9071
Technical View : Long above $0.9091
Targets : $0.9102 – $0.9111 – $0.9116 – $0.9132
Comments : Weak Bullish/Sideways
Last Price : $0.9075
Technical View : Short below $0.9051
Targets : $0.9031 – $0.9026 – $0.9002
ECB maintains current interest rates
On Thursday the rate-setting Governing Council of ECB maintained the interest rates ion refinancing operations as well as rates in marginal lending and deposit facility. The council kept the rates at 0.0%, 0.25% and -0.5% respectively. Most importantly the council expects the ECB interest rates to maintain the current or even lower levels until the inflation outlook converges close to or below 2%.
The ECB president Christine Lagarde said that economic contraction was in line with projections and that recovery was uneven across jurisdictions and sectors. She added that although recovery is in the early stages, surveys and data show that there is an improvement for May and June and economic activity could rebound in the third quarter.
ECB increased PEPP by €600 billion
In June the ECB enhanced its Pandemic Emergency Purchase Program (PEPP) by €600 billion to €1.35 trillion. Equally the council indicated that it will continue the Asset Purchase Program (APP) net purchases at a pace if €20 billion per month including purchases in the €120 billion additional temporary envelope until the end-year. In May the EU had announced a recovery fund of €750 billion aimed at shoring up the economy from the fallout of the COVID-19 pandemic.
According to Eurostat, in May 19 nations sharing the Euro combined a €9.4 billion external trade surplus which is an increase from €2.9 billion in April but a significant drop in May 2019 when it was €20.7 billion. The bloc’s exports plummeted 29.5% YoY to €143.3 billion with imports plunging 26.7^ to €133.9 billion.