FXStreet reported the euro was 0.14% lower against sterling late Thursday after the European Central Bank (ECB) held rates steady, while energy prices posed risks in opposite directions for inflation and growth.
At 10:52 a.m. ET (14:52 UTC), FXStreet put EUR/GBP near 0.8358, down 0.14% on the day. The ECB’s Oct. 29 reference rate was 0.83578 pounds per euro. That figure is a daily fixing, separate from an intraday market quote.
The ECB left its deposit facility rate at 2.50%, its main refinancing operations rate at 2.65% and its marginal lending facility rate at 2.90%. It said underlying inflation remained broadly stable and wages had not materially responded to the energy shock.
The central bank warned that a larger or longer energy shock could push inflation higher and reduce growth. Higher energy costs could also erode real incomes, household spending and investment, the ECB said.
ECB President Christine Lagarde and Vice-President Boris Vujčić said in the joint monetary policy statement, “We are not pre-committing to a particular rate path.” The ECB said future decisions would depend on incoming data and be made meeting by meeting.
FXStreet pointed to a calmer market response to Britain’s budget and pricing for a Bank of England rate increase as factors supporting sterling. Chancellor John Healey said Wednesday, Oct. 28, that the government had met its fiscal rules. The budget set a £15 billion buffer against the stability rule for 2029-30, rising to £22 billion in 2030-31.
Reuters described sterling as mostly steady after the budget and separately reported that the budget had little immediate effect on U.K. markets. Citing LSEG-compiled expectations, Reuters said markets anticipated at least a 25-basis-point increase at the Bank of England’s Nov. 5 meeting. The bank’s current Bank Rate is 3.75%; the increase remains an expectation, not a confirmed policy decision.
Eurostat is scheduled to publish its preliminary estimate of third-quarter euro-area GDP Friday, Oct. 30.
