EUR/USD holds below 1.1700 ahead of ECB decision – BBH

The Euro (EUR) is trading heavy under 1.1700 as markets await the ECB’s policy decision, where rates are expected to remain unchanged at 2.00%. With inflation near target and growth broadly in line with forecasts, investors will look to updated projections and Christine Lagarde’s remarks for clues on the policy outlook, BBH FX analysts report.

ECB seen steady at 2.00%, focus shifts to Lagarde’s guidance

"EUR/USD is trading heavy under 1.1700. The ECB is widely expected to keep the policy rate unchanged at 2.00% for a third consecutive meeting (1:15pm London, 8:15am New York)."

"Eurozone inflation remains close to the 2% target and real GDP growth is tracking the ECB’s 2025 forecast of 0.9%. Real GDP rose 0.6% q/q and 0.1% q/q in Q1 and Q2, respectively. The ECB’s updated macroeconomic projections and President Christine Lagarde’s post-meeting press conference will be key for policy insights."

"The swaps market price-in 75% odds of a 25bps cut in the next 12 months. In our view, the ECB is well-positioned to keep rates steady for an extended period while the Fed cuts rates. Bottom line: relative monetary policy stance underpins the EUR/USD uptrend."