EUR/GBP consolidates below 0.8540 after ECB validates expansive monetary policy
- EUR/GBP consolidates near the lower levels after the previous session's downside momentum.
- The Euro lost ground after the ECB adopted the expansionary monetary policy in accordance with reviewed inflation targets and COVID-19 concerns.
- BOE warns that the economy is still not out of the woods and needs stimulus for a longer period of time.
EUR/GBP remains muted on Tuesday in the Asian trading hours. The pair hovers in a narrow trading band after a big downside momentum in the previous session.
At the time of writing, EUR/GBP is trading at 0.8540 up 0.03% for the day.
The single currency lost against the majors on the expectations that the European Central Bank (ECB) will remain dovish for a few more quarters, and as worries about the spread of the Delta variant mounted.
As widely expected, the ECB kept its main interest rates unchanged at their lowest level, in specific negative 0.5% for bank deposits in ECB to force private banks to get money circulating.
As per the ECB President Christine Lagarde, this program is expected to continue at least until March 2022.
On the other hand, the sterling pares some of its gains after the Bank of England (BOE) policymaker Jan Vlieghe said that it would be appropriate to keep the current stimulus package in place for some time as the economy is still not out of the woods.
Vlieghe commented that the UK was still grappling with the Delta variant of the coronavirus after all the coronavirus-induced restrictions were lifted last week.
In the absence of any major fundamental catalyst, the market dynamics would influence the pair’s performance for the time being.
EUR/GBP additional levels
Author
Rekha Chauhan
Independent Analyst
Rekha Chauhan has been working as a content writer and research analyst in the forex and equity market domain for over two years.
