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Euro holds near 0.86 per pound after ECB lifts rates 25 bps
The ECB raised its deposit facility rate to 2.50% and projected eurozone headline inflation averaging 3.0% in 2026 before easing toward target later in 2027.
The euro held a modestly positive bias versus the British pound on Thursday, trading around 0.8595 and staying within a narrow range seen for more than a week, FXStreet reported. The ECB’s widely expected rate hike did not trigger a breakout because the move was already priced in.
The European Central Bank raised its three key interest rates by 25 basis points, lifting the deposit facility rate to 2.50%. In its communication, the ECB said the war in the Middle East continues to generate inflation pressures and that inflation is expected to remain well above its 2% target for an extended period.
The ECB’s updated projections call for headline inflation averaging 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. ECB President Christine Lagarde said the eurozone economy is proving resilient and that most measures of underlying inflation are broadly stable, while shorter term inflation expectations remain elevated and higher energy costs are expected to feed gradually into core and food prices.
On the UK side, FXStreet said the Bank of England is widely expected to keep its policy rate unchanged at 3.75% on September 17. Reuters economists expect rates to remain on hold next week, and into year end, while higher oil prices keep inflation risks tilted to the upside, with traders pricing a possible hike in November.