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Euro slips versus British pound after ECB holds rates steady
EUR/GBP traded around 0.8530, while the ECB kept its deposit facility at 2.25% and traders priced a September rate hike.
The euro weakened against the British pound as markets digested the European Central Bank’s latest policy decision, with EUR/GBP changing hands around 0.8530 after reaching an intraday high of 0.8544, its strongest level in more than a week, according to FXStreet.
The ECB left its three key interest rates unchanged, holding the deposit facility at 2.25%, the main refinancing operations rate at 2.40%, and the marginal lending facility rate at 2.65%. In its statement, the ECB reiterated its 2% medium-term inflation target, warning that uncertainty remains high and that the full inflation impact of the energy shock has not yet played out.
ECB President Christine Lagarde said energy inflation is likely to keep headline inflation above target through the first half of 2027 before easing, while noting growth risks are tilted to the downside and inflation risks to the upside. The ECB also cited the Middle East conflict as a major source of uncertainty, with officials closely monitoring the shock’s intensity and duration, along with any indirect or second-round effects.
FXStreet added that traders were fully pricing an ECB rate increase at the September meeting, while expectations for a Bank of England hike also rose amid persistent inflation pressures. Despite that, the pound saw limited support as investors focused on the political backdrop under the new prime minister and uncertainty around government fiscal plans.