The ECB is going to run into credibility problems if they keep giving the markets such a unclear steer on interest rates. It seems that while the bank is prepared to raise rates in the near term, they are trying to give the impression that “monetary policy accomodation” (economic speak for low rates!) will not be removed entirely, and that they can contain inflation with a gentle programme of rate rises while also allowing the Eurozone to grow and access capital relatively cheaply. That’s the overall impression I get anyway! The market did not like it, and sent the Euro plunging back toward recent lows. It also served to stem Sterling’s slide against the Euro, putting in a nice reversal for the day witha close above the psychological 1.4600 level.
GBP EUR – Support 1.4600 then 1.4545
Resistance 1.4660-70 then 1.4745
GBP USD – Support 1.7135 then 1.6994
Resistance 1.7225-45 then 1.7302
DATA: FOMC minutes 19:00 (expect to see unanimous vote!)
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