• ECB maintains status-quo and leaves interest rates unchanged, as was expected.
• The central bank now sees rates to stay at current levels at least through 1H 2020.
• TLTRO pricing interpreted as hawkish decision and provides a minor lift to the EUR.
The EUR/GBP cross quickly reversed a dip to fresh session tops and rallied around 25-30 pips after the latest ECB monetary policy update.
As was widely expected, the European Central Bank (ECB) maintained status-quo and left interest rates unchanged at the conclusion of its June monetary policy meeting held this Thursday. In the accompanying monetary policy statement, the central bank now sees interest rates at present levels at least through 1H 2020.
The change in the forward guidance was rather dovish but the rate applied for the TLTRO turned out to be the biggest surprise and interpreted as a hawkish decision. The central bank said that TLTRO rate can be as low as deposit facility +10 bps as against consensus for somewhere around deposit rate -20 bps.
The shared currency rallied across the board, albeit a modest pickup in the demand for the British Pound kept a lid on any strong follow-through ahead of the post-meeting press conference, where comments by the ECB President Mario Draghi might infuse some fresh volatility and produce some meaningful trading opportunities.
Technical levels to watch
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