EUR/GBP Spikes Following ECB’s 25 bps Rate Cut
EUR/GBP gained momentum near 0.8436 following the European Central Bank’s (ECB) decision to reduce interest rates to 2.0% from 2.25%, matching market anticipations. In its accompanying statement, the European Central Bank (ECB) pledged to stabilise inflation at its medium-term target of 2%. Projected headline inflation is expected to average 2.0% in 2025, 1.6% in 2026, and 2.0% in 2027. The ECB emphasised that, especially in the current conditions of exceptional uncertainty, it will adopt a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. Interest rate decisions will be based on its assessment of the inflation outlook in light of incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. Addressing ongoing trade concerns, the central bank highlighted that while uncertainty around trade policies may negatively impact business investment and exports in the short term, rising government investment in defence and infrastructure will increasingly bolster growth over the medium term. ECB President Christine Lagarde stated in a post-meeting press conference that monetary policy is “well-positioned,” although the current uncertain outlook is more pronounced than usual. Lagarde also mentioned that the central bank is close to concluding the easing cycle.
