Forex
Home›Forex›Major Pairs›Euro rises against pound as rate outlook diverges
Euro rises against pound as rate outlook diverges
The ECB held its deposit rate at 2.25% on July 23 while the Bank of England faces a CPI setup that could keep its hawks on the defensive.
The euro is on track for its eighth gain in nine sessions versus the British pound, with the rally not explained by any shift in the posted interest rate gap between the European Central Bank and the Bank of England.
FXStreet notes that currencies can move even when the visible rate spread does not, because traders price the forward path implied by the interest rate curve rather than the current differential.
The ECB held its deposit rate at 2.25% on July 23 and used the following press briefing to increase the market sense that a September move is close, with staff projections and updated forecasts set for that meeting.
Meanwhile, the Bank of England’s next steps come as UK inflation has cooled, with June CPI at 2.6% and services inflation at 3.6%, while services pay growth is decelerating, and forecasters expect inflation to peak closer to 3% this year rather than around 4%.