ECB: Period of unchanged rates may last deeper into 2020 – ABN AMRO

Sandeep Kanihama FXStreet Contributor

Analysts at ABN AMRO suggest that their current baseline scenario is that the ECB will keep interest rates unchanged until March 2020 and will hike its policy rates modestly by 20bp next year.

Key Quotes

“We expect the central bank to change its forward guidance in coming months to communicate that policy rates will likely remain on hold through 2019. The changes in our economic growth forecasts for the eurozone raise the risk that the ECB will keep interest rates on hold deeper into 2020. This is because lower economic growth will likely translate into an (even more) subdued outlook for core inflation.”

“The current consensus of analysts recorded in a Bloomberg Survey last month, is that the ECB will hike by 25bp by the end of 2019 and by a cumulative 65bp by the end of 2020. However, financial markets have shifted closer to our current base case, with the first hike fully priced in only in March/April 2020.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD flirts with weekly lows near 1.1770

EUR/USD now comes under further selling pressure, breaking below the 1.1800 support to challenge the area of weekly throughs near 1.1770 on Thursday. The pair’s decline comes in response to marked gains in the US Dollar amid steady geopolitical tensions. Ealier in the day, the ECB’s Lagarde delivered cautious remarks, although the currency remained apathetic.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.